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Wednesday 23 May 2012

TPA – Proportionately Getting It Wrong

As the initial publicity given to the report of the 2020 Tax Commission, the joint venture between the so-called Taxpayers’ Alliance (TPA) and Institute of Directors (IoD) fades away, the TPA’s head non-job holder Matthew Sinclair, defining paragon of humourlessness, is trying his best to keep this steaming pile of bovine by-product in the public eye.

Now it's confused guff from Tufton Street

And so he has been busy constructing a Strawman of significant proportions, with a post titled “Proportionate taxation is the best way to a fair tax system”, which by the most fortunate of coincidences manages to say nothing at all about the £120 billion annual cut in public spending that the Commission’s report envisages. So cuts in the NHS, education and welfare are not considered.

Instead, we are treated to more exercising of the mantra of “fairness”, despite this having already been worked half to death. “One of the questions raised is whether the single rate of Income Tax we have proposed is really fair” asserts Sinclair, and no, I don’t want to look over there. The questions raised pertain to all those cuts, and the taking from the poor to give to the rich (see also below).

And the rich, of course, are those who bankroll the TPA, and are represented most prominently at the IoD. But this does not detain Sinclair, who talks of “fairness” merely in terms of Income Tax, rather than considering all taxes paid by those across the income spectrum (the Commission makes no proposal, for instance, on VAT, which the less well off must pay on a range of consumer goods).

Moreover, Sinclair’s first example of “fairness” falls flat when measured against his own proposals. “A household with two earners both making £25,000 will pay £7,410 in income tax (£3,705 each). By contrast, a single parent earning £50,000 will pay £9,930 in income tax. The single parent pays 34 per cent more despite having the same household income” he relates.

Really? Well, under the Commission’s proposals, the two earner household would pay £9,000 in Income Tax (£30,000 @ 30p), whereas the single earner would pay £12,000 (£40,000 @ 30p). So the single parent would pay just over 33% more tax, meaning that the benefit to them would be 0.7%. Whoopee-do! There doesn’t appear to be much to choose between “fair” and “unfair”!!

But then, someone on a cool million a year would go from an Income Tax bill of over £430,000 to less than £300,000, although Sinclair is more inclined to say how the Commission’s proposals would get those limited company owners, who of course are all working at the BBC or Department of Health. And to round off, there is a characteristically snarky kick at Richard Murphy.

So all in all, rather more heat than light. No change there, then.

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