As ever in this coming election, I wonder whether the right questions will be asked. We have a very traditional voting public that see politics in two dimensions. Blue or red. Low tax or high tax. Hard or soft on crime. The parties as well as the public struggle to shift the shackles from their party and from the voting consciousness. So we have already had Theresa Mays opening gambit that the Conservatives are the party of low taxes. This is historically and philosophically true. But is this statement we want to hear or what we need to hear?
Surely the correct question is how much tax should we paying? What is the correct level and what do we want from that tax system? The British public seem to want their public services like their clothes and food. At a discount and ignoring the cost for the future. The NHS and education are seen as priorities to the public, but they don’t seem to want to invest their money into them. Then we have the indignation when death rates in Children and baby wards in our hospitals are shown to be high. Do we think this would occur with such regularity if the NHS was well-funded? Would the poor elderly be put in homes with abusers, if the NHS was fully funded? Our fake outrage stops when asked for additional money through taxes. This is because the media try to show public servants, including politicians, wasting money and if only we could stop the waste, we would not need to invest more. Simple solutions rarely solve complex problems, but are great for headlines or TV shows.
So again, what is the right amount of tax to pay? Does anyone know this? Whenever investment issues come up in education, health, prison service a spokesperson arrives with a handy quote that funding has never been higher. Of course funding has never been higher, because inflation means that for funding to stay at the same value, it has to increase. This is a ridiculous retort from the ministries that needs to be challenged, or at least ignored.
Should we look internationally to compare our figures. All these values came from the internet for 2015, so I would be happy to have them corrected, but our tax system collected around 35% of our GDP. France, very socialist and unionised collects around 48%. The EU average is 36%. So we are a little below average and at the lower end of our main competitors(DE 41%;IT 44%; IR 31%). But what do those figures mean. 1% of our GDP is approximately 22 billion pounds. This is 1/7 of the current NHS spending or the equivalent of the lloyds shares sold by the government recently. This shows the difficulty in understanding the numbers when the GDP is in trillions and £1 million is 0.0001% of this. ( That is equivalent to 1p from £10,000).
If the numbers are too difficult to truly comprehend, could the tax system become more transparent, so we know what we are paying for. How much of the education budget goes directly to the students? What is that amount for primary, secondary and tertiary? How is this broken down so that we know the true cost of educating students, in terms of teachers and buildings? What is the cost of running a hospital each year or an individual ward? What is the cost of each treatment? These are the questions that need answering and when we break down the cost and we decide on what is needed, whether it is less or more nurses per ward or LSA’s in the classroom or police on the street, then this can be equated to a number that is shown to the public. Then when a hospital, school or police force go into the red, we know it is their mismanagement and as a public body we can deal with it. It is not the big numbers that we need to make the decision, but the small numbers and the transparency this gives everyone in the system that will allow us to see how much tax we should pay. It will also give stakeholders the chance to prioritise for their area, to ensure that local needs are met. This means a fundamental change to how we view our tax system.
When we look for transparency we can then look at which taxes pay for which services. What do we get for our council tax? As the system currently mixes health, education and other local services, it is truly impossible to hold any specific person or body to account, when the system fails. Is this intentional?
Do we really need National insurance and income tax when the majority of this just goes into one pot?
At least with VAT, Excise duties and stamp duty you know when you are going to pay the tax and how much it will be. Again transparency would help if road tax went on development of transport infrastructure, with increases and decrease linked to national and local needs.
The question of how much tax we should pay is impossible to answer, until we know what we want to spend the money on. This is where the parties get it wrong, but where the public fail to hold them to account. Theresa May will tell us that Jeremy Corbyn will send too much and raise taxes. This may be true, but after years of neglect will the next government need to spend more anyway? Also, should we as a nation be deciding whether we need to spend more, if we want the public services that deliver our expectations?
This means the right question is whether we can have transparency in our tax system, so we know who pays what, how much is paid to each service and we can then decide whether we want to increase or reduce our tax contributions. If we decide to increase our contributions through our democratic process then that is binding for five years and we can then make our decision next time whether it was money worth spending. Until that point we will continue to be blinded by numbers, rhetoric and sound bites and our own delusion that we can get outstanding services on the cheap.