I was accused a few months ago of being an “economic conservative”. While it is true I generally find myself more in line with the economic policies of the Conservative Party than the Labour Party, I would dispute this description.
Simply, here’s why:
The above is for an American audience of course, but I agree with every word – whereas “economic conservatives” don’t.
No, I am an “economic realist”. Where economic conservatives argue automatically for low taxes, I argue that the culture of a civilized society determines the tax it pays – thus there are successful low-tax societies but also successful high-tax societies. If anything, I would argue that high-tax societies (most obviously the Nordics) tend to do better – hardly the position of an “economic conservative”!
Indeed, in Northern Ireland I have consistently argued for the implementation of water charges, the re-introduction of Prescription Charges and the removal of the Rates Cap – all tax rises. I am quite open about this. But again, it is hardly the position of an “economic conservative”!
However, I have argued countless times that the amount of tax we raise in Northern Ireland, and in the UK generally, is pretty much the maximum we possibly could raise without implementing taxes or charges which people simply wouldn’t accept. People in the UK simply expect the basic rate of income tax to be in the 20-25% range with another 10% of National Insurance on top (with the top rate about double that and corporation tax much the same); they expect VAT to be around 15-20%; they are used to TV licences but have an aversion to road tolls; and so on. No party enters elections in the UK advocating significant tax rises or tax cuts; indeed the highest rate of tax has been consistently higher under the current centre-right government than under the previous centre-left one; and it was the centre-left one which consistently nudged down the basic rate of income tax. I’m not sure, therefore, who is supposed to be “economically conservative”.
Ultimately, however, I am concerned at the unwillingness of the people of the UK to pay more tax openly, while at the same time demanding ever increasing public spending. This means inevitably that we get hit by stealth taxes; and it also enables some smaller parties to present “bogey men” at election time – such as the suggestion we could raise NHS funding “simply by stopping all tax evasion and avoidance” (leaving aside that in fact the UK has the best record of any comparable country at actually collecting its taxes and that tax avoidance is legal and actually almost everyone does it). There is an inherent dishonesty on both sides – the “right” pledges to protect public services which it cannot possibly afford; the “left” pledges not to raise taxes even though it has to in order to protect public services; thus both “sides” end up making the same basic, dishonest, offering to the electorate.
I think it would be helpful if, in the English-speaking world, we entirely re-assessed tax precisely along the lines Elizabeth Warren suggests. Tax is not a giveaway from our own income; rather, our own income is a product of our ability to earn which itself exists only because of taxes paid to support us. Once you look at it that way round, perhaps the case for a bit less consumption on random stuff and a bit more tax on targeted public services could begin to be made. Some “economic conservative”, huh?!