It was once said that ‘Beauty is in the eye of the beholder’. The same could be said for fairness. What one calls ‘fair’, another calls ‘unfair’. With the June Budget and October Spending Review, many have called them unfair. The government, on the other hand, calls them fair.
The government, in trying to reduce the deficit, has cut spending, increased taxes for every section of society. On this basis it is fair. However, seeing as the deficit was caused because of the recession, and the recession was caused by the deregulation of the financial sector, ultimately, it is unfair that everyone is effected by the changes in fiscal policy. To be completely fair it should be the financial sector and policy makers that should pay the shortfall and eliminate the deficit.
However, to do so would be unwise as they will look to the other sections of society and say “why aren’t they involved? We gave them credit, it’s not our fault they can’t repay it.” And thus it escalates until you are left with a large proportion of society feeling slighted, bitter and, those that can, an exodus of talent and wealth.
However, the main problem with the June Budget and Comprehensive Spending Review is that the poorest 10% are the second worst off, in relation to the policy decisions, behind the richest 10%.
In terms of income lost, the bottom 10% loses 1.6%. The richest 10% loses 2.2%. The main problem with this is that the bottom 10% cannot afford to lose 0.1% of their income let alone 1.6%. This section is either in poverty, or near to poverty. The richest 10%, arguably, can afford to lose 2.2% of their income. The poor rely more on public services than the rich, altering the percentages of how the cuts effect the actual income of these groups. This is unfair.
However, if the rich were negatively effected too much by the policy decisions then there would be an exodus, a loss of tax revenues and more demand on the next richest 10% to pick up the shortfall left by the top richest 10%.
Whilst we agree with the principle that every person must play their part to reduce the deficit, we also believe it is unfair to place the burden on the polar extremities of the wealth spectrum. Whilst we believe the poorest 10% should not be let off, we believe their contribution to be too much. The burden should fall in relation to the ability to pay, much in the same way that credit is granted. We believe this to be fair.
However, fairness is in the eye of the beholder.