Green Manifesto 2010 Taxation » UK General Election

Green Manifesto 2010 Taxation

Promoting fairness, sustainability and citizenship

This manifesto is not an uncosted wish list. It is a practical and realistic plan to move towards a more equal society, fight climate change and protect public services.

Unlike the other parties, we argue that increases in taxation for the better off are required.This is no bad thing in itself. Taxes are the fees we pay as citizens for services that are best provided collectively. They are also an instrument for fairness. The corrosive belief that taxes are no better than a necessary evil, nurtured by successive Governments over the past 30 years, is at the root of the difficulties in financing public services during the same period.

So the Green Party wants to rehabilitate progressive taxation.This requires two things: raising taxes fairly and explaining them honestly. Labour’s plans depend upon wishful thinking about how quickly the economy and tax revenues will recover.They are unwilling to tell you about the cuts and tax increases coming later.The Conservatives will cut public spending, but have not put forward a plan that adds up to remotely enough cuts without tax increases to cut the deficit.

In contrast, the Green Party is open about what we would cut, what we would defend, and about the fact that we need to raise taxation from 36 per cent of GDP in 2009–10 to around 45 per cent in 2013. This would halve the gap between Government expenditure and revenues by 2013–14 (as the Labour Government proposes) and
progressively close the gap thereafter.

We favour a Robin Hood Tax – a tax on financial transactions (see page 47) – but because that would work best with wide international agreement we do not rely on it to fill the gap in the Government’s finances, though we believe there is also scope to act unilaterally by introducing a tax on sterling foreign exchange transactions, and that the UK should demonstrate global leadership.

Our tax changes come in two groups – those that close the gap between rich and poor, and those that mainly discourage environmentally damaging activity.

Taxes to Reduce Inequality

We support a special tax on bankers’ bonuses, though we would make it permanent. Also, no one in one of the wholly or partly state-owned banks should get a bonus of more than £25,000. And our changes to pension tax reliefs (see box on page 13) will radically reduce the huge advantages the present pension system gives to the most wealthy. But this is only a beginning.

We would also:

• Introduce the new higher rate of income tax at 50% for incomes above £100,000, raising £2.3bn pa.
• Abolish the upper limit for National Insurance contributions, raising £9.1bn in 2010.
• Help lower earners by raising the lower National Insurance limit to the personal allowance rate (which is £6,475 a year, or £124.52 a week), costing £3.9bn.
• Help lower earners by reintroducing the 10% tax band and the 22p basic rate, costing £14.9bn.
• Increase the main rate of Corporation Tax from 28% back to 30% and reduce the small firms rate back to 20%, altogether raising £1.4bn.
• Raise the Capital Gains Tax rate from 18% to the recipient’s highest income tax rate (that is 22%, 40% or 50%), raising £1bn.
• Reform inheritance tax, so that the level of taxation depends on the wealth of the recipient rather than that of the deceased, raising £3bn by 2013. This will encourage people to distribute their property widely.
• Crack down on tax havens and other methods of tax evasion and avoidance, raising
£10bn in 2010 rising to £13bn by 2013. In particular press for a transparent international accounting standard that requires companies to report on a country-by-country basis so that their profits can be located and taxed.
• Reform Council Tax by making people in more expensive houses pay more and those in smaller ones less, adding an additional band at the top for the biggest houses, raising £1.7bn. In the long run we favour moving to a system of Land Value Tax, where the level of taxation depends on the rental value of the land concerned.