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1916: U.S. Supreme Court finds the income tax is constitutional.

...but will the politicians listen? Somehow, I doubt it!

Since I wrote my piece on gangs and drugs on Saturday I've seen a steady trickle of hits from Google searches about Rhys Jones and I've kept an eye on the search terms and found I was pretty well alone in voicing the opinion that drugs policy plays the biggest part in the gang gun deaths that stalk some of our estates. So it is with some relief that I find Johann Hari is another voice of sanity in today's Independent:

Johann Hari: Tragic victims of a self-defeating policy:

This is the story of two victims of a war that cannot be won and should not be fought. You have heard of the first: Rhys Jones, the 11-year-old in Liverpool who was shot in the neck as he played on his bike. You have not heard of the second: Andres Sauzo, a 24-year-old Mexican man who had his arms, legs and head chain-sawed from his body, and was found rotting in five bin bags scattered across his home town of Zihyatanejo. They are casualties - either direct or indirect - in a war that kills tens of thousands of people a year, and could end tomorrow, if we chose to.

Rhys and Andres were killed because of a political decision by the US government to wage a global "war on drugs", and demand other governments fall into line. When you criminalise a massive and growing industry – some 5 per cent of the world's entire economic activity – it does not go away. It is handed to armed criminal gangs, who flood the streets with guns to secure a slice of the riches.

Aside from also citing Milton Friedman, he goes on rightly to criticize the British political reaction to the events of the past week. I hope some of them are listening, and can hear over the noise of their knees jerking and their bandwagons' creaking...

The scattered proposals tossed out this week to deal with drug gangs are elaborate evasions of the real issue. Banning gang videos on YouTube is barely even a sticking plaster, while the Cameroonian idea that gangs are the rancid afterbirth squeezed out by single parents simply doesn't match with the facts. Denmark has the highest rate of single parenthood in Europe – but it has virtually no gangs, except among recent immigrant communities, who overwhelmingly consist of stable two-parent families.

No: if we want to stop gang culture, we need to take back the industry that makes gangs rich, and give it once again to doctors, pharmacists and off-licenses. Legalizing drugs rips the spine out of gangs. Of course they will try to move into other industries – protection rackets, cigarette smuggling and so on – but these have far lower profit margins. In a legalised economy, the gangs would no longer be the richest kids on the estate, and could barely afford firepower, so the core of their glamour would melt away.

We should be outraged. In my opinion our governments, acting in our name, are knowingly complicit in the suffering and the deaths that all this causes, for little benefit and certainly with no liberal philosophical justification. We should be demanding action now, not only to save future Rhys Joneses, but to save what is estimated at £18bn a year in domestic policing and criminal justice costs alone.

In The poor and the dispossessed Simon Mollan on Inner West writes about an horrific scenario in which an underclass in Britain is trapped in a downward spiral of "violence, poverty, food insecurity, substance abuse, anger..." and so on and wonders whether there are any possible solutions.

I have to say I wrote an essay not too dissimilar to that at school. My teacher gave me nineteen out of twenty but wrote in his comments that it was "worse than Hitler". It took me many years to work out what he meant. And I only became aware really a couple of years ago. He was condemning me for an assumption that these people were irredeemable, that they were born into it and had no chance of escape. Castigating me for a lack of hope.

But I do believe there is a possible solution. I can't claim credit for it - I heard it expounded on This Week a couple of years back maybe now, by Tom Conti, the actor. The symptoms were just as Simon so eloquently and I for one think accurately described. Dependency, fecklessness, down to the next generation, leaving them unteachable with no hope, little future prospects and a complete inability to take responsibility for ones-self.

What Conti suggested, if memory serves, is that there is now a generation that belongs nowhere. Home is hostile. And without that basic need addressed they cannot grow. He suggests massive extra expenditure on education (300/400% massive), such that at the very youngest, class sizes are very small indeed - half a dozen at most at age five and actually rising slowly as you go through school. The idea is that the teacher becomes the surrogate family, that school becomes a place of refuge. That the very basics of life can be taught in a family type environment at the very start of education.

He believes that over the course of a generation this could cut most other social safety net type costs in half or more as people grow up taking more responsibility for themselves, respecting themselves, simply "able to cope" often. Aside from the obvious savings in reducing costs of crime and disorder such as Simon witnessed on the train, he was talking about basics like people knowing how to tell the difference between a common cold and something more serious and stop using up valuable medical professionals' time on trivialities, and longer term know about how to look after ones-self better - all those self esteem issues that so often drive bad health and consequent spiral of employment problems and dependency.

As I write it down though, I begin to doubt it somehow. In one sense clearly, it can be seen as the uber-nanny of all states. But can it be dressed up in those liberal clothes such as leveling the playing field and preventing or removing "enslavement by poverty, ignorance or conformity"? I think it can. Can it be afforded? I don't see how it can't, the price for not doing so is horrible.

As our Lib Dem Tax Commission prepares to promote its policy paper in advance of Conference, where members will have to debate and vote on adopting what are really quite complex policy issues, and the Tories are getting the evidence together for their own tax policy group, William Norton helpfully outlined a "ten point briefing on tax policy" at ConservativeHome today.

It hasn't generated as much interest as the Bow Group suggestions from yesterday but it's equally important for the questions it seems to ask of policy movers and shakers when they are considering tax direction and what can be sold to the electorate. It charts the history of Tory tax pledges since the mid-seventies and the sort of promises that have been successful and the circumstances in which they can be successfully delivered.

For the Lib Dems, I think the most pertinent section lists the various Tory manifesto pledges during Mrs Thatcher's period in office. What surprised me was that when we think of that Tory government we have been conditioned to think of cuts, in tax and spending, in "selling off the silver" and yet the specific promises in those manifestos are so short, so light on detail that they're worth quoting here:

• 1979 Conservative Manifesto: “We shall cut income tax at all levels …and reduce tax bureaucracy. It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale….Raising tax thresholds will let the low-paid out of the tax net altogether…The top rate of income tax should be cut to the European average and the higher tax bands widened.” It was made quite clear that this would be paid for by an extension to VAT. More space was devoted to trade union reform.
• 1983 Conservative Manifesto: “Further improvements in allowances and lower rates of income tax remain a high priority, together with measures to reduce the poverty and unemployment traps.”
• 1987 Conservative Manifesto: “In the next Parliament: We aim to reduce the burden of taxation. In particular, we will cut income tax still further and reduce the basic rate to 25p in the £ as soon as we prudently can. We will continue the process of tax reform”.
• There was more detail in the 1992 Manifesto, which was only to be expected since the Election immediately followed Norman Lamont’s Budget and it repeated what he had said. For the longer term it promised: “We will make further progress towards a basic Income Tax rate of 20p. We will reduce the share of national income taken by the public sector. We will see the budget return towards balance as the economy recovers.”

Now sure, we all know that there must have been much work done behind the scenes, many figures checked and double-checked and the feasibility of different methods and time-scales for doing each of these studied in depth. But if it were today, someone like the Institute for Fiscal Studies would be straight on the story at the first whiff of a policy popping out to check whether the sums add up, seemingly to the penny.

Indeed we often deride politicians who suggest that they want to see the "books" properly when coming to power before risking making specific proposals for implementing such ideas. But it's common sense isn't it. Opposition parties do not have access to the whole of the Whitehall machine. Why should they be expected to know in advance whether their policies are absolutely solid? Gordon Brown is in power and changes the rules every so often to magic up some adjusted statistic, what chance those who cannot change the rules unilaterally?

And remember, in 1979 the Tories were also promoting what to many seemed a fanciful but far reaching shift in economic focus - from Keynesian state support for the economy to concentration at all costs on tight money supply control (I seem to remember even as a teenager at the time that their various Chancellors also changed the rules to suit them in this period - changing which monetary aggregates to monitor and the targets that should be applied).

And the public is skeptical too; perhaps - I don't know - more-so now than twenty-odd years ago, or maybe it's just more demanding, more prepared to believe Evan Davies than any politician. Rightly or wrongly we policy wonks seem to think they want all the detail before they can be convinced. And perhaps more crucially that more detail makes it all sound more convincing. And I'm not entirely sure that it does.

Direction rather than detail

So, when we get stuck into our debates up to and at Conference in a few weeks' time we should be thinking about very broad direction and not necessarily the detail of individual measures we might use if in power to get there. It might even help to be that much clearer about direction if we find ourselves having to choose one of the other parties to support after the next election. Parties traveling in the same direction on tax would find it easier to agree on different steps.

Yes, all the wonk work is necessary to give conference in particular and more widely the media and public some sense of how we would implement that direction but is far less important than we wonks would make out. The detail will change for a start, almost every day, every month from the day it is set in stone as "policy" as the economic environment changes. It will change dependent on the successes of implementing other policies should the opportunity arise. And direction, tax philosophy call it, is easier to convey to people than hypothetical examples of what we would have done in the particular circumstances of 17th September 2006.

A concentration on the detail as if it sells itself is what troubled Charles Kennedy that day during the 2005 election when he couldn't quite remember one specific set of variables that in the end really didn't mean much to real people I suspect.

And so...

William Norton finishes by reminding us that "perhaps the most important policy before either stability or tax cuts are sought is to decide how much public spending the country can afford, the items on which you want to spend it, and why."

As Liberal Democrats this is more apt even that for Tories. If we see economic and fiscal policy more as means to particularly desirable public or social ends then we ought to be ready, as we have shown in the past, to change our tax policies and outlooks in response to other policy desirables and external circumstances. Such was the case, for example, with the penny extra for education - we get criticism for dropping it, but dropping it was the right thing to do in acknowledgment that the right amount was now being spent, if not wisely or efficiently, in education, and that we no longer needed to raise more to fund it.

So here's my pitch - we already have a stated direction, from our mini manifesto of 1998 that we should reaffirm:

"[to] create a more sustainable and fairer tax system by shifting taxation onto pollution and resource usage and off people"

And for the detail, decide merely that this will mean:

• progressively lower taxation on incomes, profit and capital, replacing them with
• progressively higher taxes on scarce or depleting natural resources such as land, non-renewable energy, water, clean air of which the abuse hurts us all and of which the stewardship is ultimately a strategic function of us all expressed through the state.

If you believe us land taxers, we would have you believe that this will over time lead to a lower share of national income needing to be taken in taxes (even allowing for the current apparent consensus on higher spending on public services), as they will help stimulate efficiencies in an ever more uncertain market and raise economic prosperity more equally around the country and reduce the need for the massive intra-regional transfers that happen to prop up less prosperous regions.

Paying for what we take and use, not for what we make and save.

Technorati Tags: land value tax, lib dems, tax shifting, taxation, tories

I meant to pick up on this from Sunday's Observer - The Chancellor's got his eye on a new best friend

Jasper Gerard says that:

David Cameron should place a bug on BA's shuttle to Edinburgh. For with the filthy Chilean sauvignon, dry roasted peanuts and sundried delights from the All Day Deli Counter, Gordon Brown and Sir Menzies Campbell, returning to their constituencies for the weekend, could be making a light snack of the Conservative party.

Half-decent sources tell me that Brown has, at the least, made tentative overtures to the Liberal Democrat leader about what might happen in a hung parliament. And an inconclusive result is what bookmakers predict. Brown is desperate to break from Blair. Upon entering Number 10, he wants fireworks with announcements even more dramatic than his first act as Chancellor, granting independence to the Bank of England. Many of his prize rockets hoarded in the Treasury have already been set off by that twisted fire starter next door, Blair. So Brown needs a spectacular. And what sparkler would light up the political landscape more brightly than electoral reform?

Now, forgive me if I'm overly skeptical, but I reckon we've "been there, done that" and had the tee-shirt stuffed right down our throats. I know that there are a lot of Labour electoral reformers that somehow blame the Lib Dems for allowing the PR issue to go off the boil and thereby, as they see it, jeopardizing the chance of PR happening before now. And don't get me wrong, I firmly believe that it is one of the most important issues in politics in the UK at the moment. And I know that sounds real wonkish compared with terrorism or crime or whatever else there is to worry about but I cannot accept that we live in a democracy when 22% of the electorate decided more than half the seats in parliament and all of the government.

But...as the article goes on, Gordon may believe that "It could produce centre-left government for yonks, securing what [he] calls 'the progressive consensus'". I don't regard PR as a way of keeping someone in power for ever. As the argument against PR is frequently trotting out - it is about "weak government", about limiting the power of the executive - to reduce its ability to interfere with our lives unopposed as the last ten years have seen. And so we need to persuade the Tories too of the idea. If they really mean that they want small government, let them put their money where their mouth is.

Holding the balance of power, if that's what it comes to, means just that - being able to decide after the votes are in whether the people have rejected a failing, lying and corrupt Labour government and by how much, and which side's policies, mixed with our own of course, are likely more in favour with that electorate. Ming knows that, and made great play of it during his election campaign for leader.

No deals Gordon, get ready to beg. We're not going to have spent ten years attacking nearly your every move, on liberties, on constitutional reform, on illegal warmongering, on centralizing, and a whole load of others only to be seduced by a mere bagatelle of half-baked PR in the hope of creating a long lasting hegemony in which we may play some part.