Nigel Lawson 1932-2023
Lord Lawson of Blaby, arguably the most influential postwar Chancellor, has died at the age of 92. The tax system we have today is part of his legacy. However, it is not the one he wanted. This was blocked by Margaret Thatcher.
The case for a system of independent taxation was first made in his Budget Speech in 1986. Writing in 2013 in a review of Independent Taxation by Don Draper and Leonard Beighton, he explained that under his system of independent taxation every man and women, married or single, would have the same standard allowance. But if either a wife or husband were not able to make full use of their allowance, the unused portion could be transferred, if they so wished, to their partner.
His intention at the time was, he said, to prevent discrimination against the family where the wife felt it right to stay at home which meant discrimination against the family with young children. The case for a transferable allowance was, he said in 2013, as strong as ever and in a filmed interview he later told Tax and the Family that giving families the option to be taxed jointly was implicit in his original proposals.
His successors seem to be completely unaware of this background with the result that families, particularly single income families, have ended up bearing a disproportionate share of the tax burden. They have also increasingly had to be supported by means tested benefits and therefore have ended up with high effective marginal tax rates which mean pay rises result in minimal increases in family disposable incomes.
This is so different from Lord Lawson’s aims in 1986. Today’s Treasury say that nothing can be done to improve the tax situation of families because of independent families. This is just wrong. They need to dig out the 1986 papers and remind themselves of Lord Lawson’s objectives. A fitting tribute to Lord Lawson would be to implement his system of independent taxation.
Read Lord Lawson’s foreword to the Review of Independent Taxation – 25 years on.