COLUMN

A taxing lesson for the Iron Lady

When citizens are made to pay taxes from money they already have, they realize just how much they dislike paying taxes

BARBARA AMIEL April 16 1990
COLUMN

A taxing lesson for the Iron Lady

When citizens are made to pay taxes from money they already have, they realize just how much they dislike paying taxes

BARBARA AMIEL April 16 1990

A taxing lesson for the Iron Lady

When citizens are made to pay taxes from money they already have, they realize just how much they dislike paying taxes

COLUMN

BARBARA AMIEL

What, I wondered, will Canadian opinion-makers say about the protest march last week against Prime Minister Margaret Thatcher’s new poll tax—the peaceful demonstration that turned into a full-blown riot in London’s Trafalgar Square? What sort of questions would Barbara Frum or Peter Gzowski be asking? I’d put my money on the “Do you think Thatcher will be forced to resign?” approach. I know that Prime Minister Brian Mulroney, if asked, would deplore the violence while saying something along the lines of, “The Canadian way is to avoid those conditions of inequality which lead to such despair and alienation.”

In the end, it was The Globe and Mail which took the most courageous stand, I thought. “The patent unfairness of the tax,” it editorialized, “has infuriated the middleand lowerincome British homeowners who deserted the hapless Labour Party in 1979 for Mrs. Thatcher.” It is the magisterial assertion about “the patent unfairness” that so impresses, because, unless the Globe has a shortcut to the future, there is absolutely no way yet to determine whether the poll tax is fair or unfair.

All one can divine from this new bit of British taxation policy, is one lesson: when citizens are made to pay taxes from money they already have—rather than by deductions at source or automatic inclusion in the price of goods—they realize just how much they dislike paying taxes.

This is no news, of course, but these eternal verities sometimes get lost in the excitement of throwing buns at Thatcher. If you want to keep the people who pay the cost of government salaries quiescent—and paying— do not follow Thatcher’s example. Let the government run up the deficits and charge usurious taxes on everything from incomes to appliances—but for heaven’s sake get hold of the money before the citizen has it in his hand. Mulroney, one assumes, is learning that lesson himself as he fights for a Goods and Services Tax that Canadians will have to pay at the cash register.

The new poll tax in Britain is a tax to be paid by every man and woman over 18. It is to help

finance local government services from street cleaning to education costs. It is similar in purpose to the taxes we pay in Canada to our provincial and municipal governments.

Until now, in Britain, the budgets for local governments have been financed by grants from the central government, and by businesses and homeowners, but not renters. There isn’t a separate income tax for local costs. This has been magnificently inefficient and, to take a leaf out of the Globés phrase book, patently unfair. It meant that many homeowners were suffering crippling taxes while those in rented accommodation, no matter how luxurious, paid absolutely nothing. In the inner cities where large numbers of taxpayers live in government-owned council housing, local Labour councils put the financial squeeze on businesses. Many moved away, making such areas even more depressed.

Adding to the unhappiness has been the problem with the spending patterns of many Labour-controlled local governments. Leftwing councils have been financing their ambitious plans for social engineering (such as school curricula in Urdu and conferences on the need for lesbian-only graveyards) by running up huge deficits. But the responsibility

for making up those deficits, or taking the heat for cuts in essential services, fell on the central government. Everyone agreed the system had to be changed.

Enter Thatcher. She bought the idea of her policy advisers that the fairest road to reform lay with a poll tax. Not only would it finance local government, but it would make taxpayers take a keen interest in just how the money was spent. Thatcher had a shrewd idea that when everyone had to pay directly, they might be less enthused about spending money on selfdefence seminars for Irish homosexuals. (Sorry if I keep giving homosexual examples, but that lobby has been a favorite of Labour councils.)

If, on the other hand, local voters wanted to spend money on such special-interest programs instead of buying new garbage trucks, well, they could praise their local authorities, live in dirty streets and have only themselves to blame. As it is, the amount of poll tax that each individual has to pay varies according to the local authorities’ spending needs. As a result, there are places in London, for example, where residents on one side of a street, in an area controlled by Labour, are being required to pay almost twice as much in poll tax as their neighbors on the other side in a Conservativeled district.

As for the often-heard complaint that everyone, whether they were the billionaire Duke of Westminster or an unemployed laborer, would have to pay the same poll tax, well, that was easy to justify. The government created a system of exemptions, tax rebates and supplements that were to be a great safety net. As for the rest of us, by now we have generally become accustomed to paying a tax on virtually every necessity we purchase.

On paper, the new scheme sounded very fair. I can imagine Thatcher leaning forward, her head cocked with intensity, congratulating her advisers on “a very, very sound piece of work.” The scotch and sodas must have been sloshing down the night Downing Street thought it had solved that one. Only one problem remained. It was called implementation.

Take a few million people who have managed to get away with never paying a direct penny for their street cleaning and tell them the party is over. Add to the mix more than two dozen Labour MPs telling people to break the law and refuse to pay the tax. Create a system of rebates and tax credits and an esoteric system called “rate-capping” (I simply can’t explain it in less than an entire column) and it becomes transcendentally arcane. Do it in your third term of office, like Thatcher, and it becomes, well, a challenge.

Is the poll tax any more unfair than other forms of taxation? No one worth their licence as an intellectual or economist can really tell. That will only be known when we see how the rebate sytem works. Meanwhile, this ain’t no Magna Carta issue, only a case of a bunch of citizens who managed, through an anomaly of the system, to escape one level of the awesome 20th-century burden of taxation and are now being forced to bear their share. Truth to say, my libertarian heart is not really sure which side it is on.