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Stealth Taxes 2 June 2006

Posted by David in Formal Works, Labour.

The term “stealth tax” can be used to refer to any (generally new) form of taxation collected or imposed quietly, secretly or in any underhand way, so as not to incur excessive negative press comments or to score highly on the public consciousness. Notable examples are increases in duties, charges, above inflation revaluations, taxes on suppliers and removal of exemptions. Under the current government however, their use has soared.

Most taxes have attempted to use some form of stealth, spin or gloss to reduce damaging opinion, however the widely regarded start of stealth taxes was in the 1990s. Under the Conservative Government, several stealth taxes such as cutting Mortgage Interest Tax Relief (MIRAS), whilst charges and fines from speed cameras were also collected to the Treasury as a revenue source.

However it was after the 1997 Labour election victory that the term stealth tax took increased brunt of spending, particularly after 1999/2000. Labour had promised not to increase income tax, and so stealth taxes were their only way to fund the ever larger spending spree and waste. Although also planned by the Conservatives, MIRAS was totally phased out, but Labour stealth taxes spread further. Married couple’s allowance for under-65s was removed, windfall taxes were placed on utilities and North Sea oil, pushing up prices and reducing investment. Pension dividends were now also taxed, whilst various extra fines, charges and penalties were introduced or increased.

The biggest stealth tax however is resultant from fiscal drag, also known as tax/fiscal creep, a term describing the current situation in which tax bands are frozen, despite inflation, and so more earnings are dragged into higher tax bands. For instance 1.3 million more people now pay higher rate income tax, an increase of over 50%. Other tax bands, such as inheritance tax and stamp duty, have also been frozen, and with higher house prices all but a few escape these taxes which once only a few paid. Biggest joke of all was the highly publicised increase in stamp duty thresholds, which only cut £500m from a £5.5 billion pound tax, and only assisted very cheap housing in very cheap areas. Since 1997 revenue from stealth tax has increased eight-fold, yet most hardly know, the effect of its stealth plain to see. The use of fiscal drag has let more and more people creep into higher rates without knowing.

It is generally regarded that there have been 66 stealth taxes since 1997, although one figure from the Institute of Fiscal Studies estimates 157. Others have included fuel tax, greatly increased duties on alcohol and cigarettes. A reduced amount of council expenditure has been funded by the Treasury, with council tax, sometimes labelled a stealth tax due to above inflation rises, increasing greatly. In Wales, revaluation was labelled a stealth tax, as a far greater number of homes entered a higher band than those that went down. A similar and indeed worse situation due to larger price increased will occur in England although it has been postponed until after the next election.

Further stealth taxes are planned, including a further increase in North Sea Oil Tax, an extra tax on land sales for redevelopment and a truly socialist inspired council tax “top up” based on factors already included in the property value such as bedrooms, views, gardens and conservatories. A large fine will also raise revenue from anyone not letting the tax commandant photograph ones house including bedrooms, bathrooms, other interior rooms, gardens and views. The tax is reminiscent of the 17th Century window tax, which is alleged to have created the term of daylight robbery. Perhaps this is simply plain robbery?

In conclusion stealth taxes are any form of revenue collection the Government gets away without the public really noticing or directly feeling the bite, using methods just as fiscal drag, exemption removing, above inflation rises, taxes on production which won’t directly be felt by voters who’ll blame higher costs on “fat cats” or inflation, and top ups which are hard to measure. They have become endemic since 1997, as the Labour government has desperately sought to fund its uncontrollable spending spree, often for creating “stealth unemployment” in the form of unnecessary bureaucratic jobs, but also in plain and simple waste.



1. Terry - 22 August 2007

I fucking hate this country, litter fines, feeding pigieons, speed cams, death tax, long term care homes sell off, asbos for anything, parking fines, counsell tax, it goes on and on and on. If i win some money our family are out of thi shit place never to return. Communist state Britain.

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