Tuesday, 22 September 2009

Lib Dems stutter along in Bournemouth

You do have to laugh when Lib Dems bemoan splitting the reformist vote and decry wasted votes. And yet, this is precisely what their leader, Nick Clegg, no less did in Bournemouth yesterday.

He is absolutely confident that his party have the most radical environmental policies of any of the 'main' parties. I'm not sure I accept that but, that notwithstanding, the Lib Dems- who admittedly were in the vanguard of political environmental awareness in the UK- have been able to do absolutely nothing about it. Why? Lack of what Nick Clegg calls 'influence.' I call it power.

For the simple fact is that if you apply Nick Clegg's logic to his party then a voter would be absolutely mad to vote Lib Dem in any constituency where they are not currently first or second. And given that numbers around 120 seats or so, the only identifiable reasons to vote Liberal Democrat even in those seats is that you are banking on a hung parliament or all the other parties are equidistant from your political standpoint so you cant decide which other party to vote for. Hardly a strong basis.

Now on to the proposal to impose a 0.5% levy on houses over £1million. We'll put aside some minor technical confusion over what that £1million is based on and look a the policy more fundamentally. I am in favour of exploring the possibilities offered by wealth taxes for the most affluent as a means of giving those who are asset poor a better start in life- for example, the young unemployed.

This levy proposed by the Liberal Democrats seems to be the wrong way of going about it. Levies are good because they are difficult to avoid but bad because they take no account of ability to pay. Instead, I would favour a special capital gain tax on house sales worth more than £650,000 (say). It is very easy to calculate (and would be separate from capital gains tax): house price (sale) - house price (purchase) x tax rate. If the price had gone down there would be no tax. It would be collected at point of completion so would be difficult to avoid.

The weakness is that revunues would be weakest when they are needed most, i.e. during a recession. However, this policy is about long-term investment in the asset base of the asset poor so I am not overly concerned about that (income tax take goes down in a recession too but that doesn't make it a bad tax!)

The Lib Dem policy has gone off half-cock unfortunately. That will make the debates about how we can tax wealth more difficult. This needs much deeper thought before this is thrown into a media maelstrom so the Lib Dems ideas haven't actually helped very much- other than we now know what we're up against. But we knew that anyway.

1 comment:

  1. I would worry less about the Liberals and more about how we as a party face wipe out.