TaxPayers' Association of Europe - UK

Tory MEPs forced to publish expenses

Tory MEPs will have to publish their expenses and state whether they have any family members on the payroll according to new rules laid down by Conservative party leader David Cameron. This change follows a series of expenses scandals, which culminated in the resignation of the party’s leader in Europe Giles Chichester after he paid £445,000 in allowances to a company of which he was a Director. It is a very welcome development which shows strong and decisive leadership on an issue of great concern to Britons who are currently experiencing the pain of high inflation and stagnant wage growth.

This ‘right to know form’ will be published twice a year with allowances published on the delegation website. It will be enforced by a new Conservative Compliance Officer. The form will contain details as to any family members working for an MEP listed by name with their wage. Bonuses will have to remain below 15% of the relevant individual’s salary. Currently MEPs can claim £215 a day for restaurants and hotels with no obligation to explain why they are claiming the allowance or record how often they claim it. These MEP allowances total in excess of £245,000 per annum but lack the scrutiny applied to the expenses distributed to MPs.

The proposals are believed to have been controversial among Conservative MEPs. Apparently a memo was found from disgruntled Conservative MEPs arguing that the full disclosure would backfire. It apparently reads “'The more we publish, the more questions will be asked. Could we have eaten in a cheaper restaurant? Did we need that half-pint of lager? Couldn't we find cheaper paper clips?”.

I believe these MEPs are correct - if they do not change their ways bad publicity is bound to follow. However, the need to publicize the expenses MEPs claim is not merely a PR stunt. It shows the Tory leadership is taking a fundamental principle very seriously – that elected officials should be accountable to their electors for the allowances they claim. That people who argue for public sector wage constraint and a smaller state cannot themselves live it up at the taxpayers expense. MEPs (of any and every party who object) to public scrutiny of how much they claim from the public purse should not have sought elected office. If they want to avoid bad publicity then not viewing the public purse as your own private piggy bank is a good way to start. 

We expect leadership from our elected representatives – we expect them to lead by example. In this case Cameron has made a very valuable change for the better that other parties across Britain and across Europe may wish to emulate. Ordinary Britons are being asked to tighten their belts and therefore our political class must do so too.

Tax simplification can only happen with tax reduction

Geoffrey Howe launched his Making Taxes Simpler Report on the 2^nd July in front of the Conservative Shadow Chancellor George Osborne. He admitted it would be a “very long haul”. However, a new Office of Tax Simplification is to be set up if the Conservatives are elected in order to ensure that there is a thorough review of the existing tax structure culminating in proposals for simplification being drawn up.

This is a very welcome and encouraging development. Tax simplification is not our ultimate goal – we want taxes reduced not just simplified but simplification is a necessary step. The complication of the current tax system is the product of Gordon Brown – former Chancellor (now PM) who believed in big state solutions to every problem but did not want to make clear to the people the full cost of his empire building. Consequently Brown developed ever more ingenious “stealth taxes” to pick pocket the taxpayer without them realising it.

These taxes have begun to act as a powerful drag on British competitiveness as Britons spend ever more on tax compliance. However, the Conservatives must recognise the dangers of following a policy of tax simplification alone rather than combining it with tax reduction. Removing exemptions and lowering rates is a good public policy but politics is a practical profession and policies need to be made popular if they are to continue.

Without an overall reduction in tax levels simplification serves only to create a series of winners and losers from the reforms. History shows the losers never forget they lost out. Many of the winners don’t know they won. Those winners who do know they won will most likely pocket their winnings and then ask for more. In short without reducing taxes across the board as part of this tax simplification process the Conservative party could pay a significant price in future elections. Voters with a grievance against the party in power turn out to vote more than people who are moderately enthusiastic about the party in power.

Those who do not believe me should look at the effects of the Governments attempts at tax simplification. When Labour abolished the 10 pence starting rate of tax and lowered the lower rate of income tax by 2 pence to 20 pence in the pound it was hailed as a great political move. It was a masterstroke that would guarantee Labour success at the soon to be announced general election. However, when the dust settled many people who had low earnings began to realise their pay packets were to be reduced. Many on middle incomes feared this would be true for them too. Many of the more wealthy Britons lamented the tax rise on Britain’s poorest earners. A year later few would praise this bold political move.

What Labour should have done was to abolish the 10 pence rate of tax (which they introduced) by increasing the threshold at which people begin to pay tax to the point at which the base rate of tax now starts. Effectively giving all citizens a few grand more of their income which was not taxed – this would benefit those on lower incomes most but benefit all taxpayers a little. The reduction in the base rate of income tax from 22 to 20 pence could also have been enacted to ensure people with average incomes benefitted from both these tax changes. Then Labour could have stood in a new general election as tax cutters and the Conservative party would have been completely outflanked.