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Home > Politics

Michael Howard: I Love 1987

We love retro. Retro TV, retro fashions, retro computer games, retro Tory leaders...

7 November 2003

It seems Michael Howard isn't immune to the retro craze. When he announced he was standing for Tory leader, one of the first things he said was:

'When people pay less tax, they do more, not just for themselves but for each other and their communities.'

Nostalgia buffs might care to peruse the Conservative manifesto
for 1987, which says:

'We want people to keep more of what they earn, and to have more freedom of choice about what they do for themselves, their families and for others less fortunate. Governments should trust people to spend their own money sensibly and decently; high taxation prevents them doing so.'

The idea that lower tax makes people better citizens is a piece of wishful thinking that has served the Tories well over the years. But is there any evidence to show that lower taxation makes people do more for others?

Unfortunately not.

In 2000, Cathy Pharoah, head of research at the Charities Commission, told the BBC:

'You can see over the last 20 years when we’ve had relatively low taxation, and plenty of evidence of increasing wealth, that charitable giving has not increased very much, in fact there is evidence that the number of households participating in charitable giving is actually dropping.'

In 2002 two thirds of the public claimed to have given to charity. However, the bulk of that money - more than half - came from just six per cent of the population. The total for 2002 was £6.76 billion for all charities. Just to give this figure some sort of context, spending on the NHS alone in 2002 was £65.4 billion.

So what has this got to do with Michael Howard? Well, for a start there doesn’t seem to be much connection between lower tax and people giving more to charity. Do people say to themselves: 'I'm £35 a month better off thanks to lower taxation. I’ll set up a standing order for £10 a month to Cancer Research'? Of course not. A few might, but only if they’d been seriously considering donating to a charity anyway. It’s just not how people think.

And even if people were incredibly generous toward charities, it still wouldn’t be much of a substitute for state funding. Especially considering that if everything were paid for by charitable donations, the RSPCA would probably end up with more cash than the NHS.

Another obvious risk of lowering tax is that people don't give the money to good causes, they just pocket it. And if you allow public services to slide by not funding them properly, people start looking for alternatives - private healthcare and education - which are not cheap. And if your finances are stretched after you've just enrolled little Nigella in a private school, how are you going to economise? Sell your TV? Or maybe cancel those standing orders to charities?

What Michael Howard and Thatcherites before him probably have in mind is that low tax is part of a wider economic strategy, including the 'trickle down' effect.

The problem is that few people seem to believe that 'trickle down' works as well as right-wingers claim. Others think it doesn’t work at all, or worse: 'Our economic system's incentive structure, instead of "trickle-down", is causing a "flood-up" of resources from the poor to the rich,' writes Andrew Simms, policy director of the New Economics Foundation, in The Guardian.

Another thing that is implied by Howard’s faith in cutting taxation is that it’s part of making us more responsible individuals on a general level. The thinking, such as it is, goes something like this:

'The government is treating me like a responsible adult by lowering my tax. As such, I should become an active citizen and help others. I’ll get up off my arse right now and offer to help at the local community centre and post a cheque for £50 to Shelter on the way. Oh, it’s raining. I’ll do it another time.'

Of course, we’ve been giving Howard the benefit of the doubt, ie. that he genuinely believes the Thatcherite low tax dogma. But there’s another possibility - that the Tories are, and always have been, the party of business, the wealthy and the selfish.

We're not saying that lower tax doesn’t have some economic benefits in terms of stimulating the economy. But the sleight of hand that the Tories have been practising for years is to dress up an essentially selfish policy (lower tax) as being in the interest of the nation as a whole. And who wouldn’t want to believe that?

What’s most depressing is that Howard and his cronies are prepared to pass off something that is simply not true - that lower taxation makes people better, more generous citizens - as a fact.

Thatcherism owed much of its appeal to self-interest, and those same policies could work for Michael Howard. However, the Thatcher years - and there were enough of them - failed to prove that lower taxation benefits the less well-off in society.

Unfortunately, whether anyone will remember this at the next election is anyone’s guess.

Comment on this article: letters@thefridaything.co.uk

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