How George Osbourne spends your taxes

Posted on: 21 March 2012 by Alexander Hay

The Chancellor's plans to publish breakdowns of where our taxes are spent are not what they at first seem to be

George Osborne, yesterday (image C/O Byzantine_K @ Flickr)The danger with statistics is that they only provide a partial picture, regardless of how detailed they are. For example, the number of unemployed – 2.67 million at the time of writing - is certainly huge, but numbers alone cannot take into account what it's like to live places where most people don't work, or to be one of the many young people now effectively consigned to the scrap heap.

Similar scepticism, therefore, should be applied to the latest government announcement from Chancellor George Osbourne:

...The Chancellor believes that revealing exactly how the money from Britain’s 29million taxpayers is used will change for ever public attitudes to Government spending.

Tory ministers are also hopeful that if the public is more aware of how much they really contribute, they will be more inclined to vote for parties which favour lower taxes.

And they believe making more taxpayers aware that the basic rate is 31p, not 20p – once national insurance is included – would help transform voters’ relationship with the state...

In other words, the government is going to use very big numbers to scare the electorate into line. Naturally, emphasising that someone who earns £50,000 ends up paying "£4,727.67... on welfare" is a rather crude attempt to stir up resentment towards those on benefits.

But it is also disingenuous in the extreme, since by providing a breakdown of spending without putting it into context, the government is also trying to perpetuate the 'no such thing as society' dogma that defined them as the 'nasty party' in the late 1980s. After all, if you just portray everything in terms of numbers and cost, it's very easy to pretend there isn't a human being at the other end of that process.

We have been here before, of course. Labour politicised the civil service, used public funds and information channels to promote its policies and ideology, and gleefully blurred the line between party politics and the state. Worse, they demonstrated to any government that succeeded them that not only could this be done but you could get away with it too.

Spin also remains in the ascendant. Whether it is doing away with national pay deals in favour of further impoverishing run-down areas that depend on the public sector for employment, or effectively cutting the pay of those young people lucky enough to get jobs, or claiming the 50p tax is unfair on the rich (being, as they are, the only truly deserving patrons of government largesse), it's hard not to be admiring of the double-speak, cheek and utter self-serving amorality of the proceedings.

But spin can only go so far. As the government's NHS reforms grow ever more unpopular and 67% of the public support the 50p tax, the government might well ponder the danger of using figures without the facts.


Image C/O Byzantine_K @ Flickr


POSTSCRIPT: Older Is Wiser Ltd. Director and Chief Executive of the International Longevity Centre, Baroness Sally Greengross, responded to the proposals like so:

“Giving us as taxpayers, greater information about how our money is spent by Government, is very welcome. The Government uses tax revenue to transfer money between and within the generations. It is right that we all have a better understanding of these transfers.

It is right, for example, that the Government supports a decent pension alongside investment in the health and care needs of older people. It is also right that Government invests in the education of the young.

However, as we gain a greater understanding of how our money is spent, we must ensure that resultant public debate on intergenerational transfer does not generate unhelpful intergenerational conflict.” 


POST- POSTSCRIPT: Richard Seymour at The Guardian has also noted that the itemised bill only covers how income tax is spent. Other forms of tax, such as that applied to alcohol, cigarettes, petrol and - of course - VAT receive no such transparency. Why ever not?

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Alexander Hay

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