07 April 2012

Politics has become less, not more, open in the last week. (But perhaps we can all grow up on one issue, now).

Part of the background music to the London Mayoral campaign has been the usual, slightly whiny harmonies, of anyone who lives outside the M25 questioning how relevant it really is, and whether the national coverage is appropriate.

I'll leave aside Londoners' annual tax export to the rest of the UK (up to £2500 each per year).  And let's ignore the Mayor of London's personal electoral mandate (second largest in the EU after the President of France). For even without those facts, events of the last week around the earnings and tax of the candidates have changed the supposed national 'irrelevancy' of the race to become our Capital's Chief Executive. 

Dan Hodges, over at the Telegraph blogs, has described how the full(ish) disclosure of the candidates' recent financial affairs may have "permanently changed the face of political campaigning". He argues, correctly, that the expectations this creates about candidates' hinterlands, combined with existing prejudices within Parties, will not lead to a brave, new meritocracy. Quite the opposite.

Politics has become less, not more, open in the last week. But perhaps we can all grow up on one issue, now.

The release of tax returns and accounts has been referred to as the "americanisation" of our elections, in reference to the existing convention in the US that those standing for office make full disclosures in these matters.

However, there's one big difference in the States. While the public like to ensure that there has been no wrong-doing and illegality (i.e. tax evasion), they expect that their representatives-to-be have probably done quite, if not very, well for themselves, and are unsurprised if they've exploited opportunities for minimising the tax for which they're liable (I'll come back to the rights and wrongs of this later).

Here, though, when Boris Johnson, Ken Livingstone and Brian Paddick opened up their books on Thursday, a good part of the analysis and criticism was over the total amounts they had earned (before we had even got to how efficiently or otherwise they had passed it all through the tax system). Even the blogosphere's most well-defended bastion of economic libertarianism, Guido Fawkes, couldn't help but have a sneer that one of the candidates "isn't doing too badly for himself".

We should know a lot about those who seek to rule us. And we should know even more about them once they're wielding that power: salaries, expenses and other financial interests. But who is going to want every activist, tweeter, blogger and journalist opposed to their Party or to them as individuals, combing through income records and passing judgement on every penny? The calls for household - spouse's or partner's - income to be included could make this a goldfish bowl into which it is even less inviting to jump. The experienced will be even less inclined to trade in their current careers for one in politics. Our Parliament, our Assemblies, our Councils and our City Halls will become less diverse.

The trickiest part of becoming an MP is the selection process. Navigating the mazes of constituency issues, local party internal politics and national political imperatives while physically campaigning on what is almost a full-time basis is stressful, to say the least. Include the highly personal nature of counter-campaigns and the requirement to demonstrate ideological purity at every turn, and you begin to understand why the several dozens who initially show interest in a vacant seat are soon whittled down to a handful, even before the short-listing kicks in.

Now there could be an extra layer: financial history. The threat is greater for us in the Labour Party. How soon before the offers to publish payslips and mortgages are raised during selection meetings by those who know that they are not "too" rich for the tastes of CLP members? Such a selections culture will benefit the young, the bland and those doing the "right" sort of jobs in which pay bands are already well-known or public.

That's the long-term threat for Labour, in all that has come out of the last week. There is an opportunity for us, too, though.

Tax avoidance has been a dominant issue for the wider Left over the last two years. For UK Uncut and Occupy, it has been the second half, ideologically and mathematically, of their campaigns against austerity in particular, and capitalism in general.

At no point has anybody addressed the question of what tax avoidance is for and why it is used. The caricature painted by tax campaigners is one of faceless multi-nationals abusing accidentally created loopholes to enrich their boards while impoverishing everyone else. The truth is that governments create or allow opportunities for tax avoidance for a reason: because they want the money that would otherwise have been taken by them in tax to go elsewhere. For example, on Research & Development. Or on investments in under-capitalised sectors, such as the arts. Or on employing people. Or on covering losses from a previous year. Or keeping costs low for consumers. Or rewarding shareholders. Or on incentivising the company as a whole to stay based in the UK. In the current furore over Amazon's corporation tax, the EU rules on which tax rates apply to whom, where and when are designed to support the Single Market and the free trade that results from it.

We all got a slightly better understanding of such tax-avoidance-with-a-purpose this week. At least part of Ken Livingstone's tax efficiency arrangements (whatever you may think about them or him) were in order to employ others and start a new venture. When even Ken Livingstone tinkers with his tax arrangements in this way, it is surely time that we on the Left admitted that this is yet another issue which requires a rethink.

By all means, oppose all or any of the aims of tax avoidance and what results from it, if you wish. Seek to have the laws which facilitate them changed. But do so in the first instance by targetting the lawmakers, not individual businesses. There are two reasons for this. First, regulators already step in when tax avoidance is too aggressive and pursued in a way counter to intentions. Second, if it is done in a coordinated way that will apply consistently and at the same time, then you might get quite a few businesses on your side. Of course, some of those will be quite big and will be looking to close those loopholes to help stop smaller competitors getting a foothold in the market - but that's the trade-off you'll have to live with.

But then that's what politics is all about. For some of my fellow Lefties, the world this week got a little greyer and a little less black and white. For the sake of our future success, that is no bad thing.

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