A day like today is not a day for false dichotomies, we can leave those at home. But governments generally face a simple choice when it comes to raising money, between broad-based taxes (e.g. income tax) or granular (e.g. inheritance tax threshold changes for farmers). Both have their advantages and disadvantages, as is being played out in real time today on the streets of Westminster.
Yesterday's newsletter was not especially favourable to the idea that this is about threats to food security. Britain is not and has not for centuries been self-sufficient in food production. Farmers are protesting about a change to their tax affairs, as is their right. But that is not to say that I am much sympathetic to the position in which the government finds itself either.
Prior to the general election, Keir Starmer pledged not to raise taxes on 'working people'. After much prodding, it was confirmed that this included income tax, national insurance* and VAT. As a short-term political calculation, this decision had a lot going for it. The Conservatives were desperate to portray Labour as a big spending, big tax party, and having been locked out of government for 14 years, Starmer was not prepared to take any chances.
And it is hard to fault a winning strategy. Labour secured a majority of 174, the largest since Tony Blair. Yet having ruled out increases to the three largest taxes, while inheriting both a fiscal straightjacket and crumbling public services, all that was left was smaller pots of money. This brings its own problems.
The Budget saw various tax raids, including on wealthy pensioners, capital gains and, of course, farmers' inheritance. While these sorts of changes impact fewer people (hands up if you are reading this after a long day tending to your sheep), the losers of such policies tend not to take them lying down. Hence, lots of people in tweed and wellies walking down Whitehall this lunchtime.
An increase to income tax would have been unpopular, impacting millions of people. Labour would either have had to go into the election campaign being accused of preparing to raise the tax, or u-turned once in office. Neither a particularly appealing prospect. But the benefit of broad-based taxes is 1. they generate a lot of money (1p on income tax would raise around £7bn on the basic rate) and 2. they reduce the room for special pleading because you've annoyed everyone.
Labour may not care too much about the votes of farmers, and that's fair enough. But today's protests are a simple consequence of the party's decision to tie its hands on tax.
*well, employee national insurance, apparently
This article appears in our award-winning newsletter, West End Final – delivered 4pm daily – bringing you the very best of the paper, from culture and comment to features and sport. Sign up here.
