Who will win the tax war?
Peter Hoskin 11:41am
It now seems that Labour and the Tories are willing to follow the Lib Dem lead on tax cuts for low- and middle-income earners. Yesterday's papers had news that Brown & Darling are preparing a range of cuts for possible inclusion in the forthcoming pre-Budget report. And today's Telegraph reveals that Cameron & Co. are now lining up a preemptive tax cut of their own.
There are strong moral, fiscal and political arguments in favour of targeted tax cuts, so - on paper, at least - it's A Good Thing that all three main parties have hit on the same position. But dividing lines remain, and they should ensure that this situation reduces into a tax war rather than a new consensus. Chief among them is the way in which the tax cuts will be funded. Word is that Brown will fund his measures through extra borrowing - whereas the Tories and the Lib Dems would take the more sensible route of paying for them by cutting back on government waste. That means the opposition parties can major on the "mountain of debt" attack, as Cameron does in his article for the News of the World today.
But here's where the Tories' indecision and incoherency of the past few weeks may cost them dear. Because they haven't successfully pressed the case for waste-funded tax cuts already, Brown's approach will be treated with less public scepticism than it otherwise would have been. And those attacks on government debt - whilst right in content and tone - will have less traction once Brown's promising both higher public spending and lower taxes. Our PM's trying to have his fiscal cake and eat it. In this instance, the Tories may be too late to stop him.



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Robert
November 9th, 2008 12:50pm Report this commentGood news of course all those scroungers on Job Seekers and the sick, well lets see it's hoped we have a cold winter to get rid of these lice. Whoops of course I'm one of them. never mind I'm sure what ever Labour gives the poor, they will take it back another way, election time is coming.
Anthony
November 9th, 2008 1:26pm Report this commentLabour Tax cuts?Ho, ho, ho....read the small print very carefully
David
November 9th, 2008 2:53pm Report this comment"Because they haven't successfully pressed the case for waste-funded tax cuts already..."
This is a case that pretty much makes itself. If you cut government waste, you can pass the savings to the taxpayer; the Tories' own council tax pledge was exactly on this line. And as for Brown's approach, what the Tories need to do is highlight Brown's history of sleight of hand economics. By pointing out that only last year he pretended to cut taxes - only to end up making people worse off - the Tories can nip Brown's case in the bud. The man has a history of offering things that look nice, but which are actually a complete con - this is what they need to emphasise to kill his strategy.
Rex Burr
November 9th, 2008 3:47pm Report this commentWith reference to Cameron's article in the News Of The World.
As a retired working class man and homeowner, I don't know anyone who is affected by inheritance tax.
Why do the Tories keep hammering on about it?
It can only be because it affects a small part of the population who are their wealthy friends.
They then throw a few crumbs to the lower orders to keep them on side.
We know whose interests the Tories support and if you earn less than £60.000 a year it isn’t you.
I wonder how many News Of The World readers are affected by inheritance tax
TGF UKIP
November 9th, 2008 4:18pm Report this commentPete, your final para sums up the situation perfectly. Indeed, this very belated conversion to tax cuts funding by "spending cuts" looks to me very much like a desperate but forlorn attempt to shore up Boy George.
The Precious Pair's problem is though that what little credibilty Osborne did have, has long since evaporated.
As for "spending cuts" it really should be fun to see what they come up with. The racing certainty is that no quango or jobsworth public sector employee need feel themselves threatened no matter how pointless or worthless. Whatever else Blue Labour is about it sure ain't hard choices or serious spending cuts.
Incidentally, interesting to see the applause among the NOW comments for one posts suggestion that an immediate and popular tax cut would be the abolition of the BBC Licence Tax.
ChrisD
November 9th, 2008 6:42pm Report this comment"Brown's approach will be treated with less public scepticism than it otherwise would have been. And those attacks on government debt - whilst right in content and tone - will have less traction once Brown's promising both higher public spending and lower taxes."
10p tax con and others etc, etc!
The idea that the public have not woken up to the size of our debt problem, and its major role in leaving us in such a weak position to weather a recession is beyond parody.
The attacks on the government's levels of debt have had a lot of traction, and it will further damage Brown/Darling's future position on taxation and public spending policies.
But here's where the Tories' indecision and incoherency of the past few weeks may cost them dear. Because they haven't successfully pressed the case for waste-funded tax cuts already.
I also take issue with that analysis for two reasons.
1)The Tory strategy of the last few weeks has not been indecisive or incoherent, they simple have not bowed to the demands of some in political media. At the moment ICM poll this weekend would indicate the Tory position has been vindicated, while some in the media continue to get it wrong.
2)On the Tory position on waste funded tax cuts, again I disagree. Sharing the proceeds of growth and protecting the public services like the NHS which were so important to the Tory re branding under Cameron and will certainly resonate.
That is what will strengthen the Tories arguments on getting rid of unnecessary waste to find the money to fund small, sensible and targeted tax cuts rather than increasing debt further.
Because, at the end of the day while some in the Right leaning press sneered at this strategy, and gloated about it being a mistake now the economy is in recession. They failed to understand that this whole strategy sent a message of stability you can trust from the Tories.
In other words, while they have built up a message over a period of three years which would comfortable tie in a solid and reliable approach to balancing debt, public services and tax cuts.
The government on the other hand are at this moment ripping apart their economic message for prudence and golden rules as they take further debt onto the books, and deliberately leave some of it off the books.
The Libdems might advocate tax cuts, but it goes against everything they have stood for over the last 10 years. Not going to be easy to swallow, and judging by the polls the voters are not falling for it.
But the accusation that the Tories have not made their case for waste funded tax cuts already, will I am sure raise a wry smile from some who the Westminster party.
It totally vindicates my view that the political media see everything through the prism of the Westminster bubble at any given moment, rather than the whole picture seen by the wider electorate over a period of time.
strapworld
November 9th, 2008 7:50pm Report this commentBut here's where the Tories' indecision and incoherency of the past few weeks may cost them dear.
How many people have asked or demanded?, how many articles have been written by friends of the tory party? ALL urging Cameron to show a lead and give a promise of real tax cuts.
All ignored! Now in a rush to outObama Brown it has become both unsightly and ridiculous.
If anything proves my belief that Cameron is NOT a leader, this is it!
The man couldn't lead us out of a cul-de-sac!!!!
Tiberius
November 9th, 2008 7:56pm Report this commentThat's an excellent post ChrisD, and this poll showing an 80 seat majority, after weeks of some on the Centre Right having a collective nervous breakdown, does indicate the Tories are on track and that Brown's narrative is only impressing the media (although I don't think Cameron will get a majority that big).
Time still favours the Tories, and not even Brown Almighty can do anything to arrest that.
TrevorsDen
November 9th, 2008 8:07pm Report this comment"Pete, your final para sums up the situation perfectly" ... no it does not UKIP.
And no one except the most feeble minded of Coffee House readers and sundry Spectator writers are fooled by your obvious partiality.
It was Osborne who promised tax cuts in his party speech - ie a freeze on council tax, funded by savings. The notion that a coherent policy response to this recession can be dreamed up within hours is risible. It may be possible for a Spectator columnists to rip of a load of drivel in the manner that Ernie Wise used to write his plays, but a sane response to this crises must be allowed a brief time to mature.
Only the most stupid and asinine of people like this Peter Hoskins idiot (whoever he is) would suggest that Tories have not been talking about properly funded tax cuts. The correct way out of this recession is to rein in unnecessary govt expenditure (God knows there is a lot of it) and give back some at least in tax cuts.
The probable labour notion of increasing debt even more will just fuel inflation and probably a decline in the pound. The massive reduction in base rates may well yet boost inflation just as otherwise it would naturally decline.
Labour have spent 12 years rubbishing any spending pledge or tax cut proposal by opposition as unfunded and or leading to cuts. Now they propose to do the same in spades - at a time when we are already massively in debt. Lewis Carroll is writing Labour policy now.
James J
November 9th, 2008 8:59pm Report this commentThe State is simply too big to allow the necessary tax cuts. The government has signed not just us, but our grandchildren up to pay for PFI funded projects that will no longer exist when they are finally paid for and public sector pensions that will almost certainly be reneged on ,as unaffordable, when recruits going into the civil service now come up for retirement.
The public needs to be prepared for the State’s role to be reduced.
The Conservatives should concentrate on the Guardian non-Jobs. Posters reproducing adverts for various ‘Coordinators’ and ‘Diversity’ Officers with details of salaries so non-Guardian readers can see where their money goes ,would be a start.
But at the core of the problem is legislation that imposes the need for all these people and the Red Tape spewed out by the EU.
Stephen
November 9th, 2008 9:52pm Report this commentErm the BBC are saying the tories will oppose tax cuts.
JR
November 10th, 2008 11:40am Report this commentRex - I completely agree on the inheritance tax point. I don't know who drafted the article but it was unbelivable - plugging a tax 'cut' that doesn't effect working class voters outside London, and even then reminding people of a tax cut that only applies if you own your house outright, and then die - in the middle of a recession - is mental.
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