Having woken up this week to the news that Labour are setting themselves up as “the party of the consumer,” I checked my calendar to see how long it was before the next General Election. For now we are entering a period of Election Promise Fever, a well-known condition suffered by all elected members of Parliament that tends to strike round about 15 months prior to the county going to the ballot box. Once in power, or so Labour tell us, they will bring in laws so that consumer forums such as Which? and the Citizens Advice Bureau will be involved in setting the agenda of the Competition and Markets Authority. Is that what consumers have been asking for?
Labour are also going to reintroduce their 50% tax banding for anyone earning over £150,000, listening to the man and woman on the street there was a mixed reaction, some thought the wealthier should be taxed at a higher rate, others were not so sure. Some people see this 50 pence in the pound tax as one for the millionaires but out of the 320,000 in the UK who will earn over 150k per year, only 18,000 of them are millionaires. So in fact the so called millionaire’s tax will only affect 6.3% of the highest earners.
Are we cutting our nose to spite our face?Those who do earn over 150k, and live in this country have more spending power than most of us, and this money goes back into the economy. If someone was thinking of setting up in the UK as an entrepreneur then paying a high level of tax may just make them reconsider. If they take their business elsewhere, the country and its residents lose out on that source of wealth.
If existing businesses and higher tax payers decide to move out of the UK and set up elsewhere, the Tax Office ends up with trying to tax a bigger slice out of a smaller pie of tax payers and therefore the Treasury have to find the deficit in the UK’s bank account from somewhere else – no prizes for guessing who will have to cover this loss.
Are we actually saying to the rest of the world that we want to be seen as a high tax bracket country? Surely we want to encourage new wealth and industry to come into the country, and a country doesn’t get wealthy by forcing heavy taxes on its biggest employers, investors and the top achievers.
What promises have been made to help the lower paid in the country?Taxation has to be paid to cover a number of services that we have come to expect such as education, health, and housing, the emergency services and social services for example, and all are valid and appropriate recipients of public money. I note that Labour are aiming to tax the rich amongst us but I am not sure how this money will then find its way to the poorer in the community. Ed Balls has been saying the income generated by this 50 pence tax will go to paying off the UK deficit, which will take up until 2020. Business leaders are out in force stating this does not make economic sense particularly as the economy is starting to make a slow recovery.
I am still not sure how this can benefit the consumer at the end of the day who wants to have a reasonable quality of life, with some disposable income, safe neighbourhoods, good schools for our children but I shall continue to monitor all the pledges, lip service and promises up until May 7th 2015,and we would like to hear your thoughts as consumers on what you want from the people in power – we’re listening!