Bill Jamieson: All aboard the runaway debt train…
… to oblivion? Or face the truth that we’ll all have to pay more, so let’s stop dumping on ‘the rich’, writes Bill Jamieson.
First the Liberal Democrats were this week bashing “the rich” who are soaking up universal benefits. Now Scottish Labour leader Johann Lamont has joined the fray.
Just imagine that you received the following letter from Her Majesty’s Revenue & Customs in a few years’ time. Is it really so fanciful?
To: Mrs Mungo Mackay
Knock and Ring House
Come and Go Mansions
Dear Mrs Mackay,
Further to recent changes in tax legislation to achieve a more equitable distribution of income and assets, we have reason to believe that your tax return for 2014-15 is incomplete.
To determine both your tax underpayment for this year and your tax code going forward, we need to know the following:
– Your pension income from the late Mr Mackay’s pension plan
– The lump sum left to you by the late Mr Mackay in his will
– Unearned dividend and interest income received from the investment of this sum.
We believe that your income for this year may thus have been in excess of £50,000 and liable for the Equitable Austerity Excessive Income Tax charge for this year.
In addition, we believe you held in common with your late husband a weekend cottage in Aberfeldy, Perthshire. As 100 per cent of this second home asset has now fallen to you together with any paintings, jewellery, goods and chattels thereto, it falls subject to the Austerity Excess Second Homes Tax, which we have estimated at £4,500 for this tax year, and due to rise in subsequent years.
Further, we believe your estate overall may now be in excess of £1 million and thus liable for the Austerity Equitable Surplus Assets Tax. To assess the accurate amount, an assessor will be visiting the property and your co-operation will be required. Alternatively you can sign and complete the simple Form of Equitable Renunciation of All Personal Assets in favour of HMRC enclosed with this letter.
Finally, further to the withdrawal of universal benefits since 5 April, 2014, you fall liable for the Austerity Equitable Unearned Universal Benefits Levy, which is a tax on any continued use of outstanding bus travel, winter fuel allowance, pensioners’ TV licence and other such unearned “free” benefits enjoyed in that year. This has been assessed in your case at £3,859.36. A fine of 6 per cent on the outstanding unpaid balance will be levied from one week from the date of this letter.
Equitable austerity tax officer
Absurd, of course – but is it so fantastical? After three consecutive days of proposals from Liberal Democrats ranging from a mansion tax (revisited) to an additional income tax for “the wealthy” starting variously at £60,000 or £50,000, the withdrawal of universal “free” benefits from “well-to-do” pensioners and a vague scheme to facilitate house purchase for children or grandchildren out of a retirement pot to buy some rock-bottom annuity, I’ve been minded to check when my passport needs renewing.
And as if this was not enough, Johann Lamont has added her pennyworth to the questioning of universal benefits. Not only is this done by renewing an assault on the “undeserving rich”, but it is also an astute piece of political positioning, effectively aligning the SNP with the ’orrible Tories in defending the indefensible: free prescriptions for the Duke of Westminster and free bus passes for Sir Angus Grossart.
But this is why I fear Mrs Lamont and Nick Clegg and his party may be, as a Marxist might put it, dialectically correct. Is it really too fanciful to imagine that within the next three or four years we will have abandoned “free” universal benefits for “the rich”?
The script for this in Scotland was nowhere better written than in the 2010 Crawford Beveridge Independent Budget Review, commissioned by Alex Salmond no less, and arguably the best guide yet written on Scottish public finance. Here the estimated cost of free personal nursing care, prescriptions, eye tests and concessionary travel was estimated at almost £900m for 2010-11 – a figure that will almost certainly have risen since.
And this is what the report concluded: “The continuing provision of a range of universal services on the same basis as at present is unlikely to be affordable in the face of the projected financial challenges. Alternative approaches should, therefore, be considered as a matter of urgency.”
Urgency? It has now sat on the First Minister’s desk for more than two years – and nothing has been done.
Mrs Lamont is therefore right to question the long-term future of benefits, just as the Liberal Democrats are right to question them, even if we recoil at the language employed. The political problem, of course, is that neither party can “sell” such loss of universal benefits – a system which they colluded to introduce – other than by a contorted politics of envy. We must portray universalism as the friend of the toffs and the idle rich, the fat cat retired with their lightly taxed mansions and their bulging pension pots. We cannot be mobilised by a plain statement of the budget truth. But we will be roused to action by cries to “soak the rich”.
Withdrawal of benefits from the well-off; a mansion tax, a wealth tax on high-earners: we are roused to some or all of these, not because they work – they are fraught with practical problems – but because they are the political price for acceptance of greater cuts across the board. We will all have to pay to address the dreaded “D” words that the SNP can barely bring itself to mention: deficit and debt.
There has to be something more edifying in a social democracy than trying to make the majority face reality by having some vilified minority flayed to within an inch of its life.
But here we are, trapped in a runaway train hurtling towards its moment of truth, our debt and deficit climbing remorselessly. Last week we learned that the budget deficit for August was £14 billion. We burst into applause because this was deemed less worse than feared. A mere £14bn more borrowing in a month! So that’s all right then. Overall debt has now topped £1 trillion.
Spending carries on rising, the welfare bill breaks new records. It’s like the runaway train in that great Émile Zola novel: the steaming iron beast screaming through an indifferent countryside: “More coal!” Flying on we go, faster and faster, the wheels beating a hypnotic rhythm over the tracks: “A-trillion-and-one, a-trillion-and-two”.
Surely our model of social democracy has somewhere better to go than hurtling over a cliff of bankruptcy at 100 miles an hour. Better, surely, to state the honest truth: that we are all going to have to pay more, rather than dumping on those who had the temerity to save a little more for their old age than what is now deemed good for them.
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