James Frayne is Director of communications agency Public First and author of Meet the People, a guide to moving public opinion.
Outside London, “drivers” are known as “people”. Outside London, taxing petrol is known as taxing everyday life – as integral as cars are to all forms of travel for work and leisure. The fact that Phillip Hammond has floated the possibility of a rise in petrol tax at the next Budget might suggest the Treasury isn’t entirely in touch with the public mood. But it might also suggest that it is so desperate to raise revenue to pay for the NHS splurge they’re considering literally everything. Where else might the Government therefore be looking for Budget time? How could the Government raise revenue while irritating the least number of voters?
There are four areas I think they’ll explore:
- Taxing things like alcohol consumption that can lead to poor health outcomes.
- Taxing lifestyles and businesses that damage the environment.
- Moving everyone on to what looks and operates like PAYE.
- And taxing the biggest businesses.
The Government has already taxed soft drinks and my last column looked at Conservative voters’ openness to new taxes on food companies. And this time around, for the first time in a while, the alcohol sector is vulnerable – as tobacco is also bound to be yet again. The Government machine is increasingly hinting that they view all alcohol consumption as unhealthy. Furthermore, while David Cameron appeared personally committed to the British brewing industry, there’s nothing like the same warmth coming out of this Treasury or Number Ten. Plus, with younger voters currently top of politicians’ minds, their relatively light drinking habits might make politicians think it’s an easier hit than it otherwise might be.
The Government has also been softening the electorate up for a big hit on any business or individual lifestyle choice that damages the environment. Coffee cups and plastic bags are clearly seriously vulnerable, but it surely can’t be long before the Government looks at other mass consumer products like nappies and wipes. Any products that cannot be easily recycled could be targeted by Government in the name of environmental protection. Thinking more broadly, presumably all polluting fuels – and practically anyone that uses diesel, including major transportation firms – could also face at least advanced warning that they need to change their choice of fuel or face higher taxes down the line.
Politically speaking, these two areas – public health and environmental health – look the likeliest places for this Government to tax hard. The other two areas – shifting everyone to the equivalent of PAYE and the taxation of the biggest businesses – must also be targets, but are undeniably trickier. Firstly, because getting everyone on to the equivalent of PAYE hits the self-employed and business owners most of all. Secondly, because many big businesses are already said to be wavering about Britain’s future because of threats from Brexit and Jeremy Corbyn – and whacking them with higher taxes will hardly send the right signal.
What might the Government do? Would they look to further reduce the incentives around dividend payments that directors can receive? Given how little dividend payments are worth in tax terms these days, they might think it’s worth the risk. For big businesses, they surely won’t risk a rise in corporation tax (not least because ordinary firms across the country will take a hit). Much more likely is something very targeted at those businesses seemingly not serving the public good – or at least the Chancellor’s vision of it.
Each year, businesses across the land prepare to make their case to Government as to why their sector shouldn’t be hit with new tax rises. They wait nervously for Budget Day to see what will happen. I think this year their nerves will be justified.