The lack of imagination and joined-up thinking within Government bewilders me. I have posted on this before – not least on the contradictions between an apparent commitment to a low-carbon future and a determination to build runways rather than rail-links.
To that much-laboured word ‘toxic’, now add ‘totemic’ . We are witnessing a straight jacketed, clichéd and unimaginative approach to taxation policy – with a belief from Gordon, as one senior Labour Party figure told me privately last week, that if we turn the clock back to 1994, everything will suddenly be fine again.
1994? 1974, surely?
In Citizen Renaissance, we argue for a more dynamic and creative (yes, interventionist) fiscal approach to help address the most urgent issue of our times. Rather than penalise everyone with a rise in NI, therefore, or jeopardise both the Enterprise and Knowledge Economies (let alone the spirit and soul of New Labour) with a 50% tax band and a messy meddling in people’s pension pots, why not re-align VAT instead to support spending on low carbon products and penalise spending on those that contribute nothing but damage to our environmental and societal well-being?
This is not, please note, a call for a sudden consumptive stimulus – but rather a recognition of what ‘progressive’ really looks like. It will also most likely raise far more in revenues for our crunched Exchequer.
VAT was cut to 15% in the Pre Budget Report in order to shore up an ailing economy. I questioned then whether encouraging consumption while trying to reduce carbon emissions was entirely sensible. Six months on, we should be looking at a 5% VAT-band for the Goodies and a 25% VAT-band for the Baddies. It would certainly make consumers stop and think – and encourage the high carbon contributors to face up to a new reality of fiscal punishment (and lower sales) if they fail to address either their product portfolios or their increasingly anachronistic business models.
This may seem more Stalinist than Old Labour – but resources are both finite and diminishing. We can afford to plunder no longer.
