LIB DEMS TAX DEBATE. NOT MANY DEAD.

19 September 2006: The emotional argument underlying the Liberals’ tax proposal is appealing. Take two million of the lowest-paid out of paying tax altogether. But it won’t be as electorally popular as they hope. Ruth Kelly once told the House that a family with two children earning up to (I think it was) £25,000 effectively pays no income tax at all. It all comes back in benefits.

I’ve never heard this extraordinary fact repeated. Why isn’t it more widely disseminated by the government? Because it would cause a revolution. There is no answer to the question: “Why have you created a vast bureaucratic apparatus to take money away with this hand only to give it all back again with the other?”

But Lib-Dem thinking on tax is more emotional than rational. Even if it could be proved that lower taxes would create higher revenues the old Social Democrat tendency would still consider higher taxes desirable. David Rendell said: “Graduates who use their degree to enrich themselves should pay more tax than those whom work to enrich society.”

While it’s true that sketch writers and merchant bankers would pay less under Rendell’s provocative idea, and those selfish parasites making £100,000 a year in the NHS would pay more – I still want to argue that flatter taxes are fairer. Some old gent said he thought David Beckham ought to pay a wee bit more tax than a secondary school teacher. But of course . . . he already does. Pay a vast amount more, that is.

Jonathan Marks was going quite well , getting a round of enthusiastic applause when ragging Denis Healey’s socialism, but when he said that they shouldn’t antagonise “opinion-formers and leaders who make £150,000 a year” he drew audible boos and groans from the audience.

Best speech in a good tax debate – Evan Harris. Even though he lost. "Don't worry if you lose this vote, Ming, you aren't considered a Lib-Dem leader until you've lost at least one vote at Conference. Losing a vote is like a tetanus jab. You dread it. But it's never as bad as you think. And you're immune for five years."

NB: There was a fly round the podium. It has been there for two days. The significance of this is hard to place, but posterity may need to know.

A RANDOM SELECTION OF NOTES

19 September 2006: The Lib-Dem logo has got an extra right wing. "It depends how you look at it," David Howarth said. It might be facing away from us, in which case it would be an extra left wing." Years of experience goes into that kind of thinking.

>> "We must tax wealth accumulation not wealth creation." Tony Viggers (but he didn't explain what the hell that meant).

>> Still playing Blair catch-up. Chris Huhne wants the party "to develop a narrative" (NB, Blair had a Head of Story Development in the MoD). Charles Kennedy refuses to let us "walk by on the other side". Choice, markets, escape from ideology, what works, they are creatures in a landscape created by Blair.

>>Chris Rennard made the good point that the Lib-Dems are usually on the winning side of the vote in the House of Lords. Tories and Labour are relatively balanced so whichever way the Liberals go so the vote goes. What conclusions can we draw from that, casting forward to the next election?

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