Penalising 'Hard Work, Thrift and Enterprise'!
Stephen Byers is worried that inheritance tax is 'penalising hard work, thrift and enterprise'
‘The rich shall inherit the earth. It is easier for a rich man to pass through the eye of the needle than it is to find a camel in Swindon.’ Not quite a quote from the Bible
With so many Christian amongst the ranks of the Blairites you would imagine they would remember their Bible. Wasn’t it ‘the meek shall inherit the earth’? It is ‘easier for a camel to pass through the eye of a needle than a rich man to pass into heaven’. Apparently not. You may remember that ex-minister Stephen Byers was the man who famously leaked the idea of Labour breaking the link with the unions. Labour must be a party of the nation rather than 'the party of the working class'. Now he has drawn attention to the terrible plight of ‘successful’ people who suffer the indignity of having to pay inheritance tax. With so many ‘aspirant’ people having benefited from 9 years of a New Labour government they are, says Byers, being unfairly taxed given the increase in the value of houses. It is “a penalty on hard work, thrift and enterprise”.
In fact house prices are not the result of ‘success’. Home owners have had to do nothing but watch the value of their houses rise. This is an example of making a fortune without doing a thing. One of the factors fuelling this phenomenon was the decision of the Thatcher government to stop building council houses and to give tenants ‘the right to buy’. This helped to create the housing shortage which has fuelled the massive increase in house prices.
Inheritance tax is one of the last remaining features of the progressive taxation system which existed in the post second world war years, until Thatcher came to power. It used to be a social obligation to pay more tax the richer you were. But New Labour long ago abandoned progressive taxation and reintroduced means testing which not only demeans people, but wastes resources since it is very expensive to collect.
Byers bid to reorient New Labour to win back middle England appears to have been rejected by the Treasury (aka Gordon Brown) though only on the pragmatic grounds that this would leave a £3.3 billion hole in the public purse.
Rather than being the boon that New Labour believes it to be, home ownership for many people was not a choice, but a necessity, especially given the huge increase in Council House waiting lists. Home ownership for many is a terrible burden which means that people have to work long hours in order to scrape by, struggling to manage their finances from month to month. Mortgages used to be given to people on the yardstick of two and a half times their wages. Today, it is not uncommon for a mortgage to be measures on the scale of five or more times a person’s wages.
A couple of years ago, a Labour councillor in Swindon complained that there were some people living on my council estate who were the third generation to do so. This apparently showed their lack of ‘poverty of ambition’. It never occurred to him that people like living there. Home ownership is part of the rat-race in which collective interests are abandoned for personal salvation.
There is nothing natural about wanting to be a house owner as opposed to renting. Indeed a recent survey by Shelter showed that a large majority of people in need of housing wanted a decent, affordable home, whilst ownership was well down the list of priorities.