Christopher Chote, the redoubtable Conservative MP for Southampton Christchurch, has had a brainwave. He wants people to be able to offer their labour at below the minimum wage. He argues that they should be able to offer their services at a rate that doesn’t attract any tax or NI. This he believes would save small businesses a fortune and tempt them to employ more.
I’m sure his motivation to propose this change in the law might be well intentioned. He cites the UN universal declaration of human rights that includes “the right of everyone to the opportunity to gain his living by work, which he freely chooses or accepts”. He gives the example of a single person who, on the minimum wage of £5.73 an hour (£11,018 pa), should be allowed to opt out of the minimum wage and be paid £4.82 and hour i.e. the minimum wage less the tax and NI due.
The effect of this bizarre idea would be chaos and confusion in the labour market. What employer would not swear blind that all employees on the minimum wage had agreed to opt out? The effect on employment? That’s anybody’s guess, probably not great – and employees would be no better off.
What Chote’s rather muddled thinking does highlight though, is that someone on the minimum wage pays a humungous amount of tax and NI. £1,887 on an income of £11,918…that’s nearly 16%. This is a ludicrous amount. Why does someone on the minimum wage pay tax at all? What is the point of reducing people’s income through taxation and then for the state to have to provide a costly system of benefits to help them survive? Why are successive governments so determined to tax people into poverty?
I am reminded of what billionaire Warren Buffet said when addressing a gathering of super rich in the US, “We pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.” They won’t of course because, to quote Christopher Hitchens, “Nobody is more covetous and greedy than those who have too much.”
Chote’s Bill is doomed, but it could act as a catalyst for some fresh thinking on the way we tax the less well off. Surely the best way of reducing the cost of the benefits system is to let people keep more of what they earn? Our current tax system is both unfair and plain wrong. Britain is one of the most unequal societies in the Western world, and our system of taxation helps to maintain that shameful position. It’s time for those that have to have less, and for those that have little to have more.
Postscript to the above;
Not surprisingly Chote’s Bill didn’t fly (not many of them do). Didn’t stop Philip Davies jumping on the Chote bandwagon. He thinks Chote’s plan would be a great idea for disabled people who he felt would have a much better chance of landing a job if they could sell their labour at a cheaper rate.
He’s missed the point too. He he could have made the suggestion that employers who employ disabled people should not have to pay NI, but he didn’t.