A taxing problem

TJN's Senior Adviser, Richard Murphy, has an excellent piece on the Guardian newspaper website today. It explains, in a nutshell, what has gone wrong with Britain's "New Labour" economic policies.

Please read the whole (short) article. We'd highlight a couple of sections:

"Tax justice can be defined in various ways. It can be horizontal justice, so that all those on similar income pay similar overall rates of tax. It can be vertical justice, so that those with greater income and gains pay more tax. It can be assessed domestically or internationally. But it doesn't matter how you look at, New Labour has failed to deliver it.

I can live with failure if someone has tried and things haven't worked as expected. But this was not the case here. New Labour set out to fail. Its tax policy was designed to be unfair. There was one tax policy for the rich, another for the rest. There was one tax policy for those resident in the UK, another for those acquainted with the UK but able to exist beyond the reach of its taxes."

And

"When it came to power New Labour realised it was going to promote financial services as the basis of the UK's wealth. You could argue it had no choice. I do not agree. But that meant two things. The first was that it would run a trade deficit and secondly, if it was to have its own currency that meant it had to attract "hot money" to the UK to make up the difference. Labour promoted tax haven UK to achieve this, combining lax regulation and low taxes to bring money to our shores. So the domicile rules stayed for the very rich: for them tax was an option, not an obligation. Amazingly these laws even survived the outlawing of discrimination on the basis of national origin in the revised Race Relations Act of 2003, of which they are a blatant breach."

But it seems unfair to highlight just these sections. The other bits are just as good. Once again, we'd urge you to read the whole article.