From John Boothman.
IN his column (JEP 26 July) Mike Beaugeard claims to have discovered the magic potion to solve all our Island’s ills. As he bluntly explains: ‘It’s population, stupid.’ His solution: bear down on immigration and raise taxes on higher earners.
As a self-professed ‘staunch advocate of the plain English campaign’, doubtless he will welcome this equally blunt response: he’s talking through his hat. Here’s why.
Mr Beaugeard favours restricting immigration to ‘incomers we really need to fulfil (sic) the most urgently required vacancies’. I take this gobbledegook to mean a lot fewer than the numbers currently allowed in, but that presents an insuperable problem. Our healthcare and social care systems, education, agriculture, construction, retail and hospitality sectors rely heavily on immigrant staff to do work that local people either cannot do (because they lack the necessary skills), or do not wish to do (because it is poorly paid, unpleasant or both). Severe staffing shortages in some of these sectors are already occurring as a result of immigrant staff returning home. Mr Beaugeard’s proposal would turn a significant challenge into a disaster.
Over time, more focused vocational training might produce more recruits among local young people but as the population ages, and the old increasingly outnumber the young, it will be hard going. And harder still if we adopt another of his brainwaves, to ‘reduce the need for people to make larger social security contributions and to work longer before retirement’. Surely keeping the social security fund solvent, and encouraging older people to continue working after 65, is essential to cope with longer lifespans and to help stabilise the population?
Meanwhile, what we really need is to turbocharge our sluggish productivity performance – to achieve more with fewer resources. No mention of that in his column.
On to his next wheeze: soak the rich. As I, and many other commentators have wearily pointed out, this is not the panacea it sounds. Mr Beaugeard says it is ‘sheer fiscal insanity that wealthy individuals are required to contribute no more to their local community than those on the lowest rung of taxable income as a percentage of their income’. Perhaps it would be if it were true, but it’s not. A family of four (two adults, two dependent children) with a mortgage, both parents working and making pension contributions, will pay no tax until their total income reaches about £45,000. The effective tax rate is about 13% for the same household with earnings of £100,000, and 17% at £150,000. For individual incomes above that level, the various allowances are steadily withdrawn until the rate reaches 20% with no deductions. That’s what progressive taxation looks like.
The effect of this is that the Treasury is heavily dependent on the income tax revenue received from a relatively small sliver of the population. In 2018 the 70% of taxpayers with the lowest incomes provided just 20% of total tax revenue. The 3% of taxpayers with the highest incomes contributed 26%. Trying to extract more golden eggs from these affluent geese is fraught with risk – that they will try to mitigate the increased burden through so-called ‘tax planning’, move assets abroad or leave altogether, taking their six-figure tax contributions with them. Guernsey and the Isle of Man would rub their hands, not to mention those balmy Caribbean islands where income tax rates are nil; and instead of raising more money we would end up with less.
In short, Mr Beaugeard’s panaceas are nothing of the sort. By his own account he has a varied CV: soldier, musician, business owner, property manager, security officer and photographer. Rather than peddling this twaddle, perhaps he should consider revisiting one of his past occupations?
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