25 October 2011

Lib Dems Must Resist Any Further Restrictions Around 'Legal Highs'

The ACMD has today called for further punitive laws to be enacted to tackle the growing number of new psychoactive substances being marketed an consumed in the UK. It wants analogues of already illegal drugs to be banned in the assumption that they will have similar effects.

The coalition agreement does state that the Lib Dems will enable legislation that "will introduce a system of temporary bans on new ‘legal highs’ while health issues are considered by independent experts."

We have already done that. This exact legislation was part of the Police Reform and Social Responsibility Act which passed earlier this year.

Liberal Democrat policy was recently brought up-to-date at this year's conference with the passing of a motion on protecting the community from drug harms. The party's stance is now crystal clear. Any further drug policy legislation that can be voted for by Lib Dem MPs must involve:

• an independent panel to assess our current drug laws,
• a switch to the 'decriminalisation' approach which has shown beneficial outcomes in Portugal,
• or a legal framework to enable a strictly controlled supply of cannabis.

Now we must be practical. We should not outright ignore the work of the ACMD - that was the attitude taken during the dying years of the Labour government. However, if the Conservatives wish to progress with any further drug restrictions with us in government, they must also be open to considering some of our party's drug policies too.

3 October 2011

50p Rate Blah Blah Blah

Maybe the 50p rate of income tax paid by the highest earners on incomes over £150,000 is bringing in a few hundred million a year. Maybe it isn't. Either way it won't be raking in billions.

What the debate about the 50p rate is all about generating headlines without really changing much. The government fiddles about with a few hundred million to grab headlines all the time. The government will spend £680bn this year. Throwing a fraction of one per cent of its tax raising and spending power changes nothing fundamental about the impact government has. The Coalition's commitment to raising the personal allowance to £10,000 (as promised by the Lib Dems) is a much bigger shift that will cost the Treasury £17bn once it has been realised (and benefits lower earners the most). Now that's what I call income tax reform.

There is nothing wrong with rewarding success - cutting the 50p rate to 40p would do this a very little bit. There is also nothing wrong with wanting to see the richest pay more of their fair share - keeping the 50p rate would do this a very little bit.

But given the trivial size of the change, it's frustrating is seeing progressives get drawn into this debate.

Yes, income tax is progressive and is directly linked to the ability to pay. Yes, the marginal rates look stupid when plotted on a graph and a few tweaks would make it technically fairer:

However, any changes to income tax of this nature would only affect a tiny amount of the money earned by the richest 5% shown in this graph:

Getting into a heated debate about the top end of income tax is like arguing over the position of a few grains of sand in a sandcastle, when what the argument should be about is what overall shape the sandcastle should actually be.

As an example, take property. The richest 5% of property owners have a hugely disproportional amount of wealth compared to the rest of us.

Fiddling with income tax will do nothing to redress this inequality. If anything it will distract attention from the fact that such a huge wealth disparity exists.

It is measures like Vince Cable's mansion tax that would really get the ball rolling on redistributive taxation.

(Hat-tips: Adam Corlett for the marginal income tax rate graph and ALTER for the income and property distribution charts from this PDF.)