By Abdu Rafiu
For the ringside observers the fall of Mary Elizabeth Truss was dramatic and too soon. For financial experts and economic gurus it was seen coming and with speed. It all had to do with her tax reforms. What had hitherto prevailed was to tax corporations and companies heavily. The generality of people would clap for that everywhere.
Taking from the rich for the poor or the society as a whole is considered normal and the argument for it unassailable. What the wealthy have is usually regarded as common patrimony from which a handful out of smartness cornered a huge chunk. But to finance public bills, there are other forms of taxes. VAT is one of them. Whether one is endowed materially or one is in the middle class or is poor, VAT does not discriminate: VAT is VAT.
So, with her reforms the general public were likely to be affected. They would pay more in Value Added Tax. Resentment immediately set in, and the Tory Party, of which Liz Truss was leader, was alarmed and it panicked. The party was going to be the loser in the end with general elections beckoning in not too far away horizon.
The Opposition, seeing itself as the
ultimate beneficiary of what was considered serious blunders by the
Conservative Party, orchestrated resentment across the land, posing as a better
alternative. It was already rehearsing and warming up for the possibility of
gaining control of the portals of No.10 Downing Street before the general
elections that are about two years away. The Leader of Opposition, Sir Keir
Starmer, became more visible, pressing for general elections without any
further ado.
Three most senior functionaries of the government became victims—the Chancellor of the Exchequer, Kwasi Kwarteng, the Home Secretary, Suella Braverman who used her personal email for official matters—she was in charge of immigration, police affairs and security—and Liz Truss, the Prime Minister herself.
Thus
ended prematurely the tenure of Mary Elizabeth Truss more referred to as Liz
Truss for short as the 56th Prime Minister of the United Kingdom. Her
administration of only 45 days was the shortest in British history. Now, it is
time for deep reflections on what actually went wrong for the otherwise
history-making Prime Minister of the United Kingdom.
During the Summer 2022 campaign for the most coveted office of the
UK Prime Ministership, Liz Truss described herself and her policies as
‘disruptive’; she was going to challenge the ‘old’ order and ‘institutional
group think’ whom she believed had held the United Kingdom’s economy back.
She had in mind reforming the tax system, and got fixated on tax cuts. Her targets were The Treasury, the Bank of England and the Office for Budget Responsibility. Britain runs and is sustained on the 21 forms of taxation that individuals as well as corporations pay to the government.
The
financial year end of March 2022 revealed that just three main taxes, namely
Income Tax, National Insurance Contribution and Value Added Tax raised over
£530 billion to the British government. So if a Tax reform was due, it needed to
be well thought out, carefully planned and executed slowly.
When she spoke, her policy was well received and it was thought of her that she certainly meant well to reduce the tax burdens on individuals and corporations. She also had to grapple with energy crisis triggered, indeed, exacerbated by the Russian-Ukraine war.
Much as the policies were well
received, they required being well thought through, carefully planned and
executed in steps as the Natural Law of Gradualism does not permit of jumps and
gaps. As things turned out, it became obvious that she had very little time to
fine tune her tax reforms before they were presented in the Autumn Mini-Budget
statement of 23 September.
The Mini-Budget was thought generous to the people but gravely
harmful for the markets. Liz Truss boldly cancelled increases to National
Insurance and Corporation Tax, she cut Income Tax and removed restrictions to
contract workers Tax. These caused vicious spikes in the market until The Bank
of England was forced to step in.
The
Bank of England raised interest rates by 0.5 percentage points to 2.25
making it the highest level in14 years all in an attempt to make up for the
shortfall in revenue from taxes, the most prominent source of income to the UK
government. Revenue inflow was reduced without a credible plan for additional
income. This created grave economic turmoil of the year as the base mortgage
rates jumped to unaffordable rates for homeworkers.
The narrative for Liz Truss soon became desperate; although her
intentions to give families tax cut was right, the execution went disastrously
wrong and that was the final straw for her. Finding herself at a crossroads,
Liz Truss reversed the tax policies. After the Finance Minister Kwarteng
resigned, his successor Jeremy Hunt removed the cap on energy prices meant to
last two years in the wake of the Russian retaliatory moves against the West
that depended on her supplies. Mr. Hunt simply put the cap to last only six
months.
The reversed policies included tax cuts for the wealthy and
corporations. Also affected was the tax waiver for overseas shoppers. Her
policy was that tourists and overseas shoppers would make purchases free as a
way boosting sales and by extension promote production reckoning that with
higher sales, the more money there would be to buy more goods. Members of Fuel
Poverty Action took to the streets in protest march pressing for affordable
energy for Britons. Their posters read: “Energy for all”; “Tax the super rich.”
Liz Truss lost the trust of her compatriots and she had to go.
In practically all countries, people do not see anything wrong in levying special and heavy taxes on the wealthy. Profit invariably is regarded as loot. So, it must be taken from the corporations to compensate the generality of the people. This is borne out of ignorance of the principles and mechanisms that govern life as revealed in higher knowledge of truth of life and existence made available to mankind in these times.
Ignorance is proven in not knowing that what is on offer is equal opportunities for all but not equality of all human beings. The table of the Lord is well laden for all, but each takes according to his own cultivated inner radiance, which manifests in the inner capability to recognise opportunities and the unfolding of his talents and abilities. In other words each one of use approaches the table of the Lord according to his ability.
The first duty of everyone is to avail
oneself of the knowledge; otherwise he would be groping in the darkness and
grumbling. What had been sown in the past will determine the harvest of today
according to the Law of Sowing and Reaping better captured in the proper
terminology for it, the Law of Reciprocal Action.
Governments believe it is helping the less endowed by taking from the rich to compensate for the shortfall of the less endowed or to take struggle away from the citizens or from any section of the society. Life is a struggle, which leads to the unfolding of talents and abilities. Where there is no goal and attendant struggle to meet it, the gifts of the Creator each person carries is paralysed. In the words of Daniel Swarovski, in his priceless work, The Time Is Ripe: “A good government is not one that insists on attending to everything while adopting a paternistic attitude towards its citizens regarding them only as passive tools.”
He went on: “The tendency of physical and mental
laziness is contrary to the necessities of life on earth which require
movement, for without work, without industry, we cannot master life…The over
protective system is a great burden to the economy and the working population
and companies which have to pay heavy taxes.”
Liz Truss believed that if the burdens of companies are reduced by
way of reduced tax, there would more capital for expansion of activities and
development, which would translate into more jobs and all-rounded economic
flourish for all. But her minister was wrong in hastily removing the cushion on
energy prices since the rise was externally induced and the unforeseen and
sudden consequences were beyond the average citizen to handle.
A
list of the 21 taxes individuals and corporations in the UK pay goes as follows:
Income Tax
Capital Gains Tax
National Insurance
VAT
Corporation Tax
Bank payroll Tax
Petroleum Revenue Tax
Fuel Duties
Inheritance Tax
Stamp Duty
Tobacco Duties
Spirits Duties
Beer Duties
Wines Duties
Cider Duties
Betting & Gaming Duties
Air Passenger Duty
Insurance Premium Tax
Landfill Tax
Climate Change Levy
Aggregates Tax.
As far as Liz Truss was concerned these were too burdensome to the
British citizens. How Rishi Sunak, the new Prime Minister, is going to handle
the economic crisis remains to be seen.
It must be said that mankind are living in new times, a feature of
which, to our shock and chagrin, will witness the rise and fall of governments.
*Rafiu is a commentator on public issues
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