Labour’s Tax Stance Is Failing Because It Goes Against Human Nature

Ed Miliband
Reuters/Luke Macgregor

Try asking a politician to condemn an abuse of the MPs’ expenses system and you will get the same response from almost all of them: “sorry, not one for me”. In fact, newspaper stories about expenses scandals almost never carry quotes from MPs, with the notable exception of a few especially chatty and self-confident members (you may have come across John Mann).

Why are politicians so uncharacteristically shy when it comes to talking about their expenses? Well, lots of them – stay with me – aren’t stupid. They know that throughout their careers almost every MP either has done or will do something that could somewhere, somehow be construed by someone as a bit dodgy. Rather than tempt fate, rather than create a rod for their own backs if and when they ever do become the story, MPs rationally steer clear of talking about this issue. It’s not exactly honourable, but it is sensible.

If politicians can collectively make this entirely rational, calculated strategic decision when it comes to talking – or not talking – about expenses, why does all rationality, calculation and strategy go out of the window when they talk about tax?

This week the Labour Party has launched its bold, brave stand against tax avoidance, demanding that everyone, rich or poor, “pay their fair share” of tax, whatever that may be. There isn’t anything intrinsically wrong with political parties generally engaging in this type of rhetoric. But when politicians make being tough on ‘tax avoiders’ such a key part of their offer to voters, and when they go about it in such a pious and worthy manner, there can only be one outcome: the spotlight will be shone on their own personal tax affairs.

Ed Miliband and Ed Balls have pledged to conduct a “root and branch review” of HMRC’s approach to tackling tax avoidance if they end up in Downing Street. But the leader of the Labour Party himself has benefited from the exploitation of a tax loophole by his mother: his family minimised the amount of tax they paid on a London property using a ‘Deed of Variation’, an instrument the Shadow Chancellor has suggested he will look at clamping down on.

And what about Ed Balls? He said over the weekend that families should make sure they get a receipt for cash-in-hand odd-jobs like having your garden hedge trimmed. Yet twelve Labour MPs in the Shadow Cabinet have today been exposed for claiming thousands of pounds in taxpayer-funded expenses without submitting any receipts at all. Balls himself is also revealed not to have kept receipts.

Of course, there isn’t anything remotely wrong with paying someone ten pounds to trim your hedge and not getting a receipt. Likewise, there isn’t anything wrong with wanting to reduce the tax bill your children have to pay when you die. Fundamentally, putting your kids above the state is human nature and it also the right thing to do.

By purporting to be some high-minded authority on what is right and wrong when it comes to paying taxes, especially in such a self-aggrandising way, Labour’s leadership have put their heads on the chopping block. Miliband and Balls’ suicidal stance on tax goes against human nature so much that even they fall short of the standards they are setting others.

In many cases, as with expenses, MPs are perfectly capable of engaging their brains and thinking strategically. On tax, they rarely do.