Tory rebels binding government’s hands on tax is a bad idea

There’s a delicious irony to Yvette Cooper’s victory in leading a gang of Tory rebels to block a no deal Brexit by stopping the government’s ability to raise – or lower- taxes if Britain leaves the EU without a deal.

In normal times, the notion that a wannabe Labour leader could have harnessed cross-party support to stop taxes going up would be cause for hysterical hilarity. It would certainly be a wet dream for low tax, small state Tories, many of whom who were to be found among the twenty Tory former ministers who voted for the Labour MP’s amendment on Tuesday.

But these are not normal times. If you were being kind, you might argue that supporters of the amendment were trying to steer parliament away from what they see as the most ghastly Brexit outcome, the no deal option. That’s the one which Brexiteers prefer to call moving to World Trade Organisation tariffs.

And if you were not being kind, you might call the Tory MPs who voted for the amendment along with the 276 MPs from across the parties, saboteurs. Or indeed traitors, if you were feeling particularly angsty because trying to take away the government’s ability to use its fiscal powers! at a time of such economic uncertainty, is irresponsible.

The ability of any government to raise or lower taxes is absolutely central to its functioning as the effective executive of the country. To take away those powers is nothing short of mutiny by parliament because it reduces the Treasury’s flexibility to pass regulations relating to no deal financial provision’s without parliamentary approval.

In this case, it’s doubtful that the amendment to the Finance Bill, which enacts the Budget, will lead to a Trumpian style shutdown. Tax experts say ministers will still be able to make tax changes as they will be able to introduce new clauses into future Finance Bills, or by creating new emergency legislation. But that would be cumbersome, particularly at a moment when time is of the essence.

Imagine this. Imagine if, through events which are beyond our control, the UK were to leave the EU on March 29th without a deal. And imagine if the predictions of the most doom-mongers were to turn out – for whatever reason – to be correct?

How would government – and parliament – be able to react then?  Or let’s say les gilets-jaunes who are causing such turmoil in France were to take President Macron hostage, man the barricades and stop all transport in and out of France? Or Matthei Salvini, Italy’s deputy prime minister, was to expand his latest plans to unite with Poland – as he did yesterday – and Hungary to force through changes in Brussels? What then? The Chancellor’s hands would be tied, and emergency legislation would have to be quickly forced through in panic conditions. That’s not a clever place to be.

One can only hope that dangerous mutiny was not the intention of the Tory rebels – Nicky Morgan, Sir Oliver Letwin, Ken Clarke and Dominic Grieve among others – who helped Cooper with her amendment through with just seven votes.

More optimistically, the impact of Cooper’s win may well be to force some of the more extreme Brexiteers to toe the line and scare them into voting for the PM’s Withdrawal Agreement which goes to a meaningful vote in parliament next Tuesday. Together with Grieve’s latest amendment – forcing May to come up with a new deal in three days – the defeat may force the PM to get a better deal which excludes the controversial Irish backstop.

Downing Street is still in denial mode, arguing that the government’s defeat is annoying but not significant. Believe that if you will.

As Benjamin Franklin, one of the founding fathers of the US,  wrote in a letter to French scientist Jean-Baptiste Leroy in 1789, the year the French Revolution broke out: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” Tory rebels playing games with tax should remember it’s a dangerous business.