18th September 2011

Death and Taxes.

They can’t be avoided.

That’s how the saying goes.

It is of course quite correct to say that Death cannot be avoided.

As the rich man in the parable discovered, when your time is up, it does not matter how full your barns are, when you gotta go, you gotta go.

But taxes are a different matter.

Ask Philip Green.

His shop is top but his taxes are not because he has discovered, invented, adopted, perfectly legal ways of not paying tax on his income.

So that’s OK.

But there is a tax that is regressive, that is affecting all of us and for which this so called low tax, coalition Government is entirely responsible.

When I say affecting all of us, if you have invested in Land or Gold, you probably won’t notice it.

But if you are poor you must certainly will.

It’s called inflation.

Whatever you might say about the last Government inflation was kept low.

I always liked it that the Governor of the Bank of England had to write a letter to the Chancellor explaining why inflation had gone up and had to promise to bring it straight back down.

I haven’t heard too much about those letters recently.

Increases in fuel prices and VAT have obviously contributed to the increase in inflation and the coalition has condemned us all to higher prices but inflation has also increased from 2% to 41/2% possibly 5% meaning that unless wages rise, everyone will be worse off.

Inflation is a regressive ‘tax’ that affects the least wealthy more than the wealthy especially if that wealth comes not from earned income and is held in assets other than cash.

So the next time the Chancellor appears in public, a rare sighting that will be, or if Danny Alexander makes a speech about tax at the Lib Dem Conference, which he is planning to do:

Here’s the thing, taking low earners out of Tax and keeping the 50% tax rate sounds fine in principle but if what you are doing in your general monetary policy, is not keeping a tight reign on inflation then you are, in effect, continuing to tax the poorest disproportionately.

Inflation is a bad thing wherever you meet it whether on the high street or in a pop song.

There have been some great anti-tax songs written and sung, George Harrison, Lonnie Donegan to name just two artists who have tackled the subject.

But as inflation stretched the average pop song throughout the overblown, inflationary seventies, making it longer and longer, it took Johnny Rotten to root out the inflation and return the pop song back to its three chord, three minute perfection ……