The Lib Dems' tax cut con

LSS

Pretty typical Lib Dem. They are all things to all people. Simple trick to expose the complete emptiness of a liberal democrat is to actually ask what they stand for? Answer in short is that they stand for everything... yet they are also against everything. It really depends on who is asking the question lol.

It's all a smoke screen... hopefully the wider UK electorate will see past it and see them choking because of it.

Hereford

I laugh when I see parties posturing about cuts to the Civil Service. Particularly with respect to senior positions.

I have spent a couple of years working with Government Departments and know just how hard it is to reduce headcount. Indeed, most of the savings headlined are nothing more than moving people from one Department to another. Real reductions are quite rare. Why?

It's the terms that have to be used to make any Civil Servants redundant. It averages out around £100+k and can cost as much as half a million for senior people.

So when parties actually start the process they keep talking about, they find that the cost of achieving the reduction is so huge that they can't face it.

Most of these CEO's etc will have gold plated redundancy clauses which will eat away all the savings gained by the process.

Good luck with that one Glegg and co. That is, if ever you get a chance to try. Which, of course, you won't. So a safe committment then really.

Colin

With regard to tax policy:

We should look to Estonia for inspiration.

John

Hereford, you could reduce headcount by having a hiring freeze, people will still retire and leave, and tell the civil service to do the same job with less people.

Ian C

There is a strong case for replacing the now exorbitant and hated Council Tax with some form of local tax and ability to pay element. But this requires a 'joined up' vision of what has to be done to sort local government, income tax, tax credits and other benefits among many other aspects of governing the country.

If he had made an impressive speech with a clear stab at how all this would come together then he would get attention. But that is too difficult for most politicians in terms of the vision needed and the complicated task that it has become - but no less necessary, indeed more, for that.

Just getting up on stage on a Sunday night in September to announce that 'we're now the low tax party' is a farce. My worry is how much better will any one else be?

TrevorsDen

The dog that didn't bark in the night but which will come home to roost (err... !) is the burgeoning public deficit.

In order to avert a full blown sterling crisis we will have to cut spending and maybe increase taxes !

But anyway if we are to ease the tax burden on the hard pressed lower paid and middle classes there will have to be significant spending cuts.
If we are to ease the tax burden on small companies (because its here where most jobs are created) we will have to cut spending.

We will have to cut spending on these things because the deficit is already too large and growing. If the deficit (if any) were more manageable then taxes could be cut safely without the same level of spending cuts - but 'Ballsonomics' has left us with no room for manoeuvre.

Faceless Bureaucrat

John [4.48pm]

They have been trying that one since Sir Peter Gershon tried to implement it in 2000 - all they do is change the name of the job vacancy and recruit as normal. If someone as effective as Gershon couldn't make it work, mere politicians have no hope...

David Lindsay

As the party alike of decadent economic libertinism as of decadent social libertinism, the Lib Dems are the true children of Roy Jenkins.

As the party alike of decadent social libertinism as of decadent economic libertinism, the Tories are the true children of Margaret Thatcher.

And as both, New Labour are the true children of Tony Blair.

What's that you say? That makes them all exactly the same...?

Tom

Be happy at least that they are talking about tax cuts. The pendulum may be swinging...

Diablo

Yeah! At last David Lindsay speaks up for the Martians. It's about time somebody pointed out the effects that the Earth's economy is having on the interplanetary community.

Lord Elvis of Paisley

Hereford "It's the terms that have to be used to make any Civil Servants redundant. It averages out around £100+k and can cost as much as half a million for senior people.

So when parties actually start the process they keep talking about, they find that the cost of achieving the reduction is so huge that they can't face it."

So why doesn't the Government just agree to pay them the minimum redundancy payment applicable as per the minimum legal requirement, or have I missed something?

m wood

Don't forget that they also have a £20 Billion package that will increase Green taxation and taxation on the 'more wealthy' to help poor families. There has already been mention at this conference of an addition 20p/litre on petrol. You can be pretty sure that these two 20B packages will result in an overall increase in taxation for most people.

RobertD

The only way to reduce government spending is to cut whole functions. Leave any part in place and no how much you work to cut headcount it will regrow.

To get rid of functions it will be necessary to repeal the legislation that requires their existence. Any government that has serious cost cutting ambitions will have to make its very first piece of legislation a comprehensive deregulation bill abolishing a wide range of quangos and specific regulations. They will also need to be prepared to stand up the the EU and tell them that we can no longer afford to implement those EU directives that add cost but no value. Finally there will need to be legislation that requires all government employment contracts to be amended to state that payments for redundancy will be restricted to a maximum of the entitlements under the redundancy legislation which they provide for the private sector.

Dave and George have just a few months to put together the chopping list.

mac

With only the mildest effort, Edward Stourton skewered Clegg on 'Today': Of the £20bn, "a few millions" will be available for tax cuts after "our other priorities" have been funded. Clegg simply isn't smart enough to spin the twaddle he peddles.

Damon

A local income tax will increase the marginal rate of tax paid by most taxpayers; the marginal rate being the key determinant of whether a tax cut will encourage more productivity. Not giving higher rate taxpayers full tax relief for Pension contributions will also do the same for those on the 20%/40% border. Therefore the likely outcome of the LibDem proposals is actually reducing tax revenues as they effectively discourage people from working harder.

Charlie

Tax cuting is back on the agenda. Low and middle income earnersare beginning to realise how many overpaid and underworked employees of the state exist. Cable has let off a small charge at the base of a very high dam of apathy and indiffernce, holding back a vast lake of peoples anger at the bloated state. Anger, like the water under a high pressure, will at first slowly widen the crack. Little will happen which will be noticeable as the water errodes the apathy from within. Finally the dam will break and the torrent of anger will sweep away the structures which are not strongly built. Strength will be provided by government structures proving that they are needed, give value for money and have earnt the respect of the people. If you combine the talk of tax cuts with accountability then it is likely you will gain the attention of a large number of people who feel ripped off by the state. The Liberals are talking about the state providing value for money. The attention is being turned on the vast numbers of the employees of quangos and management consultancies and the vast incomes they receive. In many ways these types have acted as off sheet liabilities which have not been noticed in the Public's perception of government waste. There are large numbers of self employed low and middle income earners who no longer feel loyalty to the public school and grammar school white collar middle class pen pushers of the former state employee who typify Labour and do not feel anything for the somewhat smug Cameron. The problem with Cameron is not his Eton education but the fact he has a weak jaw, he is bit of chinless wonder. Plenty of Etonians are tough, the problem he is not one of them. If Cameron had boxd or played rugby he would be better man. As Kipling says in one of poems , when the Norman is dealing with the Saxon, fairness underpins and links what it is to be British. People who evade tax while earning millions, while those earning £10K pay tax is not fair.

Hereford

Elvis, Unfortunately there is a contractual obligation for payment of these high amounts. It should be noted that the majority of the money goes to make up pension contributions, and to pay the Civil Servant the 6 months notice that they enjoy.

Alex Sabine

Fraser: The reason there is no pledge to reduce the UK tax burden (tax as a % of GDP) in the policy paper you link to is that it dates from last year, before Nick Clegg became leader. It sets out a £20bn tax switch and not an overall tax reduction, so I agree the title 'Reducing the Burden' is pretty tendentious.

The new policy involves £20bn of spending cuts, which will then be reallocated between the party's spending priorities (on things like the pupil premium) and net tax cuts.

You're right to say these net tax cuts are likely to be relatively small - perhaps around £4-6bn - but at least it's the right direction of travel!

Damon: Introducing a local income tax would increase the marginal rate were it not for the proposal to cut national income tax by 4p in the £. The estimated average local income tax rate is about 4p, I believe, so the marginal rate would be unaffected.

On the other hand, because council tax would be abolished, there would certainly be a reduction in tax bills for low to middle income people.

If the new spending review does make room for, say, £5bn of tax cuts, then at least another 1p could be taken off income tax, reducing the overall marginal rate even after LIT. On the other hand, it might be a better idea to use the money to raise the personal allowance and take more of the low-paid out of the direct tax system altogether.

Finally, on the question of moving to a flat rate of tax relief on pension contributions. The rationale here is that tax reliefs and exemptions are implicit subsidies, in the sense that they push up marginal rates on people who don't benefit or take advantage of the reliefs. It seems perverse that relatively high earners should receive 40p in the £ towards their pension pots from the public purse, while lower-paid people only receive 20p in the £.

I'm not a great fan of tax reliefs - in general I think it's better to have a broader tax base and lower rates. But if there is a case for encouraging saving through the tax system, then I can't see why the low-paid (who necessarily have to spend more of their income) should need less incentive to save than the well-off (who already save more). So moving to a single rate of relief makes sense to me in terms of economics and equity.

(There is also a good case for raising the top rate income tax threshold to counteract Brown's fiscal drag, but that's another issue.)