Wednesday, 5 October 2016

The Exceptionalism of Wealthy

The Exceptionalism of Wealthy

Exceptionalism is the perception that a country, society, institution, movement, class, or time period is "exceptional" (i.e., unusual or extraordinary) in some way and thus does not need to conform to normal rules or principles.

Matthew Sweet’s “The West End Front” focuses largely on four hotels during the Second World War – the Dorchester, the Ritz, the Savoy and Claridges, and one part of the story concerns rationing.

How rationing affected ordinary people, and how it affected the wealthy shows very clearly a kind of exceptionalism, where the law permitted, and even countenanced a loophole for those who had enough money. I want to explore how this worked, and compare how the proposed (and rejected) health charge conformed to a very similar same pattern on exceptionalism.

When rationing was introduced, everybody had ration books, and the message from the Government was that we are all in this together, and no one is being treated differently. We all have the same weekly rations.

But for those who could afford to eat out, matters were very different. Rationing did not apply to restaurants, so diners who could afford it by virtue of their wealth, were not in the same situation as everyone else.

As Mike Hutton explains, in “Life in 1940s London”, this caused resentment, but whenever measures were introduced, ways and means were found which the rich could exploit.

“A burning resentment that the rich were able to sidestep austerity finally began to concern the government. In the summer of 1942 a fixed maximum price of 5s for all restaurant meals was introduced. This was largely to counteract criticism that those who could afford to eat in restaurants were able to consume more than the rationing scheme would allow, without having to forfeit any coupons. While on the surface, this appeared a fairer system, it didn’t take long for creative managements to render the new limits meaningless. Huge cover charges were introduced by most leading hotels and restaurants, while for the more modest establishments the menu ranged from 2s 6d to 3s 6d. “

“Special dispensation was granted to the six swankiest London hotels. The Ritz, Savoy, Dorchester, Claridge‘s, Grosvenor House and Mayfair were authorised to charge an additional 6s for the privilege of eating in the most refined settings that London had to offer.”

As writer Mary Lee Settle commented:

“Those who ate in restaurants had no inkling of what it was like to live on rationing, on scrounging unrationed food, fish or carbohydrates that meant standing in queues hour after hour, gray-faced with fatigue.”

This was an exceptionalism of the wealthy, how they were not subject to quite the same regime as everyone else, and could get privileged access to extra food by means of their wealth. And it was approved by the war time government.

Now fast forward to the recent debate on the health tax/charge. A cap was put on it restricting the amount the wealthy would have to pay. If your earnings were in excess of £164,000, you would not be taxed on any extra income, only on the first £164,000.

The percentage would decrease as earnings rise past that point. It would insulate very high earners from paying what they would consider too much tax.

Rather like the ration books, and the wealthy, here the wealthy would have their own opt out of part of the system. Just as home food was rationed, they would pay up to the limit, but after that, it would be more like dining out, ration free, and doing rather well out of it!

An attempt was made to take off the cap so that everyone would contribute the same amount on the health tax / charge, but this was rejected by the States Assembly.

As Ben Shenton remarked on Facebook: “Is this the worst States Assembly ever? Yesterday they passed tax breaks for millionaires in respect of the health tax. Without those tax breaks there would be no cuts in FNHC budgets and nursery education would not have to be means tested.”

But it looks as if retaining the cap was a step too far, and enough States members were no longer prepared to tolerate the exceptionalism of the wealthy.

No one says that the high net worth individuals are paying a charge rather than a tax, but for those very wealthy individuals, apart from rental income, they only pay 20% on the first £625,000 and then pay 1% on the balance, although as accountants PwC helpfully note, “through pre-immigration structuring it is possible to effectively cap a HNW’s Jersey income tax liability at £125k.”

Looking at that, one can see that the health charge was a tax by any other name. It was rejected by the States, and now they must seek other means of raising the revenue. I can think of a few ways in which that can be done, but I don’t really feel charitable towards a Health Minister who believed the public could be hood winked into believing something was a charge when it manifestly looked like a tax, with an unhealthy dose of exceptionalism for the wealthy.

1 comment:

st-ouennais said...

There was also the contrasting British Restaurants eg.