Nick Clegg took many by surprise this morning by appearing in the Guardian calling for an emergency, temporary tax on wealth to help pay down the deficit. Why make the call publicly, when he’s a senior member of the government that decides whether this happens or not? And why now, so far away from Budget time?
The obvious answer is that this is not a thought-through policy proposal, but merely a bit of positioning to cheer the troops ahead of next month’s party conference. It will not happen, say many (including the BBC’s Nick Robinson), so there is no need to worry about what Clegg actually means.
But, that analysis ignores a couple of things.
The first is that Clegg is very wary of making himself look powerless, which is exactly what would happen if he makes a public appeal for something that doesn’t then happen. When he didn’t turn up to the prime minister’s statement about his refusal to sign up to the EU treaty, Clegg’s advisers said it was because he didn’t want to be pictured sitting mute and powerless next to the PM when everyone knew he disagreed with the decision. For a politician who is already frequently characterised as weak, being rebuffed in public on a tax issue like this would be very damaging.
The second reason to doubt the common analysis is that there is precedent for this. In the run up to this year’s Budget, the Lib Dems called openly for a more rapid lifting of the income tax threshold, which is exactly what happened. Clegg also publicly promoted a “tycoon tax”, which would ensure wealthy people are not able to minimise their tax beyond a certain level by using reliefs. The cap on reliefs (which gave rise to the disastrous charity tax) was then billed by Danny Alexander and others in the party as exactly this kind of tycoon tax.
This latter example is telling. Clegg appeared to be calling for one thing (a minimum rate of income tax), but was vague enough with his language to be able to claim something else (a relief cap) as a victory. Notice that on this occasion his language is similarly vague – he simply asks for a “time-limited contribution” from the wealthiest in society.
George Osborne has already started to dismiss Clegg’s idea, during a visit to the North East when he said:
I am clear that the wealthy should pay more which is why in the recent budget I increased the tax on very expensive property transactions.
But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.
But don’t be surprised if, come next spring, there is something in the Budget that just about gives Clegg enough wriggle room to claim a victory.
Jim Pickard
Kiran Stacey