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The Election Campaign limps into its second week and Lord what a yawn it is turning out to be. Today Labour will launch their “Election Manifesto” which will be a bit of a hoot because they have already had 13 years to sort things out under benign economic circumstances and only managed to cock everything up, so now they have “Seen the light ” and wish to be re-elected ? I hardly think so !

The other two will launch their ‘Manifestos’ too but frankly and under the current economic circumstances, these also will be pious hopes rather than specific promises and all that can be expected. The Media will get themselves up in a lather about the first “Leaders TV Debate” this Thursday which I suspect will turn out to be a non event if not just a real yawn.

The Real Problem

Although each party may propose individual policies that in themselves are attractive, what they are not going to do is show the whole thing from a “joined up” perspective. The reality is that for every “good idea”, there is a cost and what may benefit one group of people may well disadvantage another.

A good example is the LibDem proposal to raise the Income Tax threshold to £10,000pa, an excellent idea as it would take millions of people on lower incomes completely out of the tax system however, the Devil is in the details, as ever.

It would be a really ‘good idea’ if the aim was to raise VAT to say 20-22%, as lifting people out of tax would serve to ‘compensate’ those people on low wages, part-time workers and so on, might that include NIC both for them and their employers ? If so and unintentionally, a whole different business model and employment pattern, may well emerge.

As an Example

But then again, would it help Single Mums, Old Age Pensioners or anyone else not paying tax ? They will have the higher costs caused by the increase in the VAT rate but in terms of not being taxpayers, no equivalent “compensation” in paying little or no tax on their earned income.

It was from this conundrum that Brown’s ‘Tax/Pension Credits’ system arose, complicated, expensive and costly to administer plus also in the end, totally inefficient.

A ‘possible’ alternative might well be a “Citizen’s Spend Allowance” that replaced “Personal Allowances, Tax and Pension Credits etc.” with an assumption of a basic right to a specific income level which could then be tailored to personal circumstances and “calling in more help” as required during the different stages of life that people experience.

Turn the Telescope Around…

If instead of saying that there are set allowances before people pay tax on their income, we took a different view and said that; “Each Citizen has a cash allowance of (eg. For arguments sake), £10,000 pa”, upon which, if they were earning more, they would pay no tax upon but if they were not earning because they were unemployed, disabled, pensioner or whatever, they would receive in cash, tax free every week.

On top of that, “additional allowances” could be paid and only these would be ‘means tested’ and measured against particular circumstances: Pensioner., Single Parent, looking after an ‘impaired’ relative ? Each ‘condition’ would attract particular additional benefits tailored to those circumstances and those capable of being modified in the light of actual experience. Such additional allowances would be transferable, a disabled child has their additional allowances transferred from their Parents to themselves at a given age.

As to how this is better, if you start with an ‘assumption’ and then add to it, likely it will be fairer, far cheaper to administer and easier to adjust along the way. But then again, in our ‘crazy world’ an illegal immigrant might then claim that their Human Rights had been violated – you can’t win them all !