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Liberal green taxes hit the poor, but so does global warming

It may not have been Ming’s High Noon, but it was arguably his Clause 4. The Liberals have left redistribution behind them – at least by the route of progressive taxation on income. Higher income tax was their most distinctive domestic policy at the last election – it was what made the LibDems different. Its passing marks a decisive break with the Left.

Indeed, the Liberal Democrats seem to have leapt to the other end of the political spectrum, over the heads of the Tories. For, if they win power, they will now cut the standard rate of income tax by 2 pence, raise the higher rate to #50,000 and cut corporation tax by 1%. This makes the Liberal Democrats the only major UK political party committed to tax cuts. Guess whose seats they’re targetting at the next election.

It’s left traditional Tories chewing the carpet, because of course David Cameron has refused to give any firm commitments on tax cuts. Gordon Brown is chewing another carpet because he realises there is no way he could switch the burden of taxation onto pollution in this way. Mind you, the Chancellor would insist there is no way the Liberal Democrats could either, in practice.

There is indeed a very large question about whether the Liberal Democrats are serious about green taxes. Under their plans, Mondeo Man will have to pay #800 for his Vehicle Excise Duty and 2 litre Focus Fella even more. Fuel will go up as the fuel duty escalator – scrapped by the Chancellor after the 2000 fuel protest – is restored. There would be hefty taxes on air travel.

Capital gains tax would also increase, and those on above-average earnings will pay more National Insurance contributions as the ceiling is lifted. This was something Gordon Brown also wanted to do, but he was blocked by Tony Blair on the grounds that middle class families would regard it as an increase in taxation. There is also a rather vague property tax waiting in the Liberal Democrat wings, and of course, local income tax could hit many middle income households.

The other parties are claiming that the Liberal Democrats would never have the will or the means to raise these very substantial indirect taxes, and that their policies are all pie in the environmental sky. The new taxes would hit the very “hard working families” that Sir Menzies Campbell claims he wants to help.

Think of it: no more holidays in Tenerife, no more spacious family car; huge increases in fuel costs, even more expensive houses and heating. And the problem is, if these taxes worked, and people curbed their addiction to fossil fuels, public spending would also have to be cut to match the reduced revenue.

Moreover, since the environmental taxes are not linked to ability to pay, they would hit less-well-off families harder than better off ones. The family car is a much bigger slice of a poorer family’s budget than a rich one’s. The wealthy will easily find the cash to licence their 4 by 4’s. The Liberal Democrats have not said how they would pay for the increase in public transport that would be necessary if ordinary people are to be priced out of their cars.

And why didn’t the Liberal Democrats opt for road pricing instead of vehicle excise duty? Could it be because this might mean Liberal Democrat councils would be obliged to support congestion-charging in future, in cities like Edinburgh where they have opposed it?

There is indeed an air of contrivance. of political expediency, about the tax prospectus which undermines confidence in the LibDem’s seriousness. Would they have the courage of their convictions? Would they really tax middle class families out of the skies? Or is this all a Mandelsonian exercise in sophisticated political spin, designed to make the Liberal Democrats appeal to Tory voters, with tax cuts, in Tory areas and to Labour voters with green taxes.

Left-wingers believe Sir Menzies Campbell is using environmentalism as a ruse to import a tax-cutting agenda, altering the philosophical underpinnings of Liberal Democracy. They may be right. If so, Britain faces an even narrower political choice at the next general election, with all three UK parties refusing to contemplate increasing income taxes, even as inequality in income becomes ever greater. Why couldn’t they have kept the 50p rate AND introduced green taxes?

All this may be true – but I think the Liberal Democrats are still to be congratulated for opening up this debate. In the very near future – unless the world’s climate scientists are having a collective delusion – all parties are going to have to introduce policies like these. The public may not realise it yet – but they will, once sea levels start to rise and house prices crash in flood plains and central London. When insurance rockets because of unstable weather and droughts wipe out English gardens. When countries like Bangladesh lose thirty percent of their land mass causing massive population movements. When the stock market goes haywire because confidence fails in the carbon economy.

The private car, as we know it, is doomed and international agencies will impose restrictions on air-travel if we don’t. In a few years, cutting C02 emissions will become the overriding priority of the entire planet. So, we might as well get used to it. The LibDems have given us a taste of the future – and it is green.

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About iain2macwhirter

Writer and journalist.

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