Deliverance Day minus 9. The Institute of Fiscal Studies has introduced an element of reality in to the Election campaign after scrutinizing the parties’ plans for dealing with the mounting public debt. They have concluded that none of the parties’ figures stack up and whoever is in government will have to make bigger public spending cuts and increase taxation more than they are telling the voters. The Institute has demanded that the parties should be honest about how they are going to proceed. It is timely because in a poll last month 50% thought that the deficit could be dealt with by public spending cuts. More, 75% thought that dealing with inefficiency would do the trick. It seems that the politicians are scared of the public who appear to be scared of reality.
Previous polls have indicated that they prefer public spending cuts over tax increases as the less painful way to close the gap in the Government’s budget. In general the public do not think that they should have to pay for the actions of those who brought about the financial crisis. In the main, the banks and financiers are to blame and they should bear the brunt of the pain. The politicians are also culpable and need to lead by example, as they have in Ireland, and take a pay cut. The public are not blaming themselves; but a certain section, taking advantage of cheap money, went on a spending spree and lived beyond their means or thought they could get rich quick by becoming amateur speculators or property developers. The only people that have a clear conscience are those at the very bottom of the pile who could not afford to join in the party.
When Resurgence drew up its Party Programme in 2007 we were conscious of a very basic premise contained in Catholic Social Teaching; ‘The common good of a society cannot be provided for unless each individual/citizen receives all that they need to discharge their social function.’ It is still our view that the most vulnerable must not be forced to bail out the Country. Those on low incomes must be allowed to keep what they earn. Those with home responsibilities and pensioners must be helped by ensuring their incomes do not fall below the minimum income guarantee.
We have set ourselves the objective of making the minimum wage a living wage. From October this year the minimum wage hourly rate will be £5.93, giving a weekly pay of £207.55 or £10,792.60 per annum. A living wage would have to be £7.15 per hour or £250.00 per week. With the target of ensuring that it did not fall below half of national average earnings. This means making above inflation annual increases in the rate. People on minimum wage would immediately benefit by increasing the income tax threshold to remove them from the direct tax system. The threshold for this year would be £10,793. We would also reform the income tax bands and retain a progressive system of 10p, 20p, 30p and 40p in the £.
Every tax payer would benefit from this and there would be some balancing in relation to the National Insurance Scheme. We would increase the threshold for payment of the employee’s National Insurance contribution to the annual equivalent of the Income Guarantee, that is £6896 per annum. This is a lower threshold than that for income tax because we believe that those on minimum wage need to have a stake in the social welfare system. However, we would reduce the employee NI contribution to 10p in the £ and remove the cap on payment. Introduce an employer NI contribution based on a 10p in the £ payroll tax. This simplified calculation would help employers, who would also benefit from a progressive corporation tax of 10p, 20p and 30p. Employers must support society.
We would maintain universal Child Benefit as the main support for mothers and provide a financial support system to eliminate family poverty. The financial support presently provided for carers is a national scandal. They have to jump through hoops to qualify for a pittance, that is £53.90 per week for a minimum of thirty-five hours caring. If they qualify for another benefit or the state pension they receive nothing. We are proposing that they get £132.60 per week the same as the minimum income guarantee. Even that does not adequately recognise the value of the work they do, but it is a start. We would also provide support for adolescent carers and their family through foster grand-parents paid the married couple income guarantee.
As previously posted we would increase the basic state pension to the same level as the Income Guarantee – £132.60 – and equalise the qualifying age at 63. Retain the contributory qualifying requirements but rationalise the scheme in a logical manner. Provide additional age-related payments at 70, 77, 84 etc. Introduce an additional-pension scheme by replacing ISAs with PISAs, that are linked to the provision of housing mortgages.
We have proposed alterations in other areas of taxation. In order to balance the annual budget some extra taxation would be necessary. We believe that this should be raised through taxation on consumption as part of a strategy to stretch the World’s resources. We aim to encourage a frugal economy. We would reform the Value Added Tax system. VAT would to be applied to the basic cost/price before the application of Excise Duties. As VAT bears heavily on those with low incomes we would have varied rates. Retain zero and 5% bands, introduce 10% and 20% bands, and reduce standard rate from 17.5% to 15%. The criteria to be based on essential versus luxury and polluting versus clean. Because of the severity of our national debt it might be necessary for a temporary period to have a 25% rate. As the national situation improves we would like to get rid of VAT altogether, but that would require the permission of the European Commission and will never happen while we are members of the European Union.