With the current rebellion against the rise in capital gains tax, and in consequence, the apparent back down by the Tory leadership – resulting in another LibDem ‘gain’ being watered down, and practically worthless – it begs the question of how much things have actually change. For example, Left Foot Forward have the news that despite strong rhetoric from both the LibDems and the Tories on how they would not have any tax payers money being spent on anything to do with Goldman Sachs whilst allegations hang over them, the government is doing exactly the opposite! It is simple hypocrisy and illustrates how regardless of whatever the two parties promised before the election, they are presiding over the return to business as usual!
So if the capital gains tax is increased at a relatively low level, this further confirms my already existing critique of LibDems who think that their income threshold raise will be funded through the capital tax alone/primarily. It further signals that the public services cuts are going to be even more critical; there has already been concerns at the extent of the cuts so far, and how they are targeting key areas that provide for future recovery (e.g university, job opportunities). It will add to an already regressive tax policy. There needs to be higher taxes on the most wealthiest, instead of damaging public spending cuts. Lets hope the LibDems don’t just back down on the fight for higher capital gain taxes, after all, how much have they already compromised for the Tories?
However, in realistic terms, it seems more likely that the capital gains tax will be set low. The policy direction of the government is worrying, there is no real positive restructuring taking place, which is required to prevent business as usual: it still seems to be wealth and powerful interests governing the government. Instead, if this government was really serious about helping tackle inequality, there would be a real systematic restructuring of the banking system and the taxation system.
Instead, what do we have? We have NI increase being stopped most likely for an increase in VAT – which will hurt the most vulnerable in society the most! Then, lets look at these ‘fairer’ taxing measures, as mentioned, the change to the income threshold will now be regressive, as the progressive measures by the LibDems to fund it have been dropped. Furthermore, other measures such as the capital gains tax set to be watered down. Then the banking system, the levy is not going far enough – there needs to be a Tobin Tax. Furthermore, there is no need for a long-winded committee into breaking the banks up – its obvious this is a stalling tactic – and will most likely work. If it doesn’t, the right-wing rebellion will most likely stop it going through anyway.
It seems like anything the LibDems try to get through ends up facing serious opposition from the Tory rebels, whilst the LibDems don’t seem to have any real opposition to the Tory polices. You can see who is in charge, and you can see whose government it is. This will be a real problem come next election. However, for now, it seems that the radical change we need to happen to the economy in taxes and the banking system, well after all the oppositional rhetoric, will not happen.