Green Party Tax Manifesto: A badger’s budget?

Introduction

“Don’t look, you’ll only encourage him” is something that every primary school teacher has uttered to their class.

I am tempted to apply this to my review of the Green Party manifesto and its tax ideas.

Look, if I was to stand naked in the street, with my Y-fronts on my head and two pencils stuffed up my nose then I would probably be arrested (subject to police funding in the local area).

However, it seems that there is no threshold of loopiness beyond which a politician might be taken off the streets.

This is fortunate for the Green’s and their tax policies as, let’s face it, they’re as mad as badgers.

Brace yourselves…

Income Tax

The first policy is a plan to align the rate of income tax – such that investment income is taxed no better (or worse) than earned in come. This is a policy that does raised this arbitrariness before.

Even that famous socialist Winston Churchill once remarked that it was odd that the working man paid more tax than your average trust-afarian (he might not have used that term).

But one would think they would do this by merging income tax and NIC so that there was a slightly higher rate of income tax that applied to everything. But, if you look at their proposals around NIC, this doesn’t seem to be the case.

Further, can you really tax a dividend at the same rate as salary – knowing that the dividend has already suffered corporation tax.

So, yeah, there are some wrinkles which the Green’s don’t trouble themselves with.

In addition, they would equate the rate of pension tax relief with the basic rate of income tax, so everybody would only get a tax relief of 20%.

Call me Brock, but I can kinda get behind this one too.

However, I wonder whether a better policy might be to provide relief of, say, 30% to everyone. This will incentivize those on lower earnings and save money for those who are higher earnings (the top-earners are likely to be fettered by a pitiful annual allowance these days)

Employment Taxes

The Greens will also remove the Upper Earnings Limit that restricts the amount of National Insurance paid by high earners.

This represents a significant hike in NICs and is very much swimming against the stream when compared to other parties.

So far, so not so badger.

Wealth, IHT and capital gains tax

But here, to channel Harry Hill, begins the badger parade.

Firstly, we see the first use of the W word this manifesto season.

Yes, the Wealth Tax.

The Green’s propose a wealth tax of:

• 1% annually on assets above £10 million; and
• 2% on assets above £1bn.

Of course, there are so many questions about a wealth tax might apply to. Does it include business assets? Pensions? Main residence?

How many are answered? Yes, zero.

We are told that only a tiny minority of people would pay this tax – however, one would assume is that they could only have any chance of roughly ascertaining the effect by answering some of these questions.

Additionally, what research have they done on the behavioral consequences of such a tax?

The tax burden will be pretty much the highest since the D-Day landings, and the expectation is that wealthy residents will simply stomach another rake? The Greens might be over-egging the draw of the Imperial War Museum on a drab Sunday afternoon here.

We are also told that the Greens will align the rates paid by taxpayers on income and taxable gains. Of course, this might mean they are going to lower income tax. Yeah.

Finally, we are told that there will be Inheritance Tax reform. However, this is limited to the “closing the loopholes used by the super-rich”.

Corporate tax

The good news is that the main rates of corporation tax will remain as they are.

The Greens will initially retain the levy on energy companies’ windfall profits. A move that is mirrored by Labour.

They also believe they can raise £9bn a year by the end of the Parliament by bringing back the bankers levy.

Green taxes

They will introduce a carbon tax set:

• initially at £120 per tonne of carbon emitted; and
• rising to £500 per tonne over a ten year period.

This, we are told, would raise up to an additional £80bn.

Tax avoidance and monkey business

Other than the vagaries set out  above, there is nothing specific about how they might approach tax avoidance.

This might be because the Greens don’t seem to feel they have to visit the magic money tree for their funding.

Conclusion

The Green Party’s tax manifesto is, in my mind, pretty cynical.

It taps into the fact that a good tax is one that is paid by others.

This can be seen throughout by the party identifying the 1-2% that it feels its policy will effect.

In other words, the wealthy being there to be plucked over like Colbert’s goose.

Sadly, when it comes to the wealthy, history shows us that the goose does not hiss and the pips do not squeak. When in danger of a serious loss to their plumage, the wealthy do something about it.

The two main parties and Reform seem to have steered clear of green taxes. Clearly, the Greens haven’t and there is some commonality with the Lib Dems.

However, looking at the rest of their policies, the revenue raised by their green taxes might depend on whether the last person leaving Britain has remembered to turn off the lights.