Go ahead, punk...
Peter Hoskin 4:11pm
Just to recommend a great debate that's fizzing away over at Comment Central. On one side there's Daniel Finkelstein, who - I think it's fair to say - is less-than-impressed with what he calls the Lib Dems' "punk" tax cuts, and advocates a more cautious approach. On the other, there's Nick Clegg, who says those unholy, punk tax-cuts are right for our economically-depressed times.
Finkelstein got the ball rolling with this post, in which he takes a jibe at the Lib Dems' tax policy. Clegg responded here. I quote a paragraph with largely sums up that response:
"Why does Danny think it’s impossible after a decade of spiralling Whitehall spending to find 3% of that money that could be put to a better use? That’s what Gordon Brown says - the Government knows best, and the rest of us are not allowed to question the way he spends our money."
The latest installment is a response to Clegg's post by Finkelstein. Again, I pull out a key passage:
"Right, before we get started let me straighten one thing out. I am not against tax cuts. I am in favour of them. But I want proper tax cuts, not punk tax cuts.
What's the difference? Proper tax cutting means overall tax cuts that come from changing the organisation and scope of the state. It requires proper reform and takes time. Punk tax cutting is borrowing to cut taxes or announcing unconvincing tax cuts based on dubious "savings" just to be able to say you are cutting specific taxes by a given amount immediately."
Do take the time to read through all the posts (as well as Guido's commentary). They really do represent the political blgopshere at its best - lively, informative, topical and, in the best possible sense, combative. You've just got to ask yourself one question: are you on Team Clegg or Team Finkelstein?
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TrevorsDen
November 10th, 2008 5:57pm Report this commentThe point about 'dubious' savings is surely a good one.
Every £ of spending is someone else's special interest and or job.
Thats why turning off the spending tap is not easy. For a start spending generates commitments. Its not easy to turn these off.
LibDem tax 'cuts' are a bit of a con because its just robbing Peter to pay Paul. If you are simply taking money off someone to give to someone else - how does that stimulate demand?
Taking a bit off a few rich people does not I am afraid translate into being able to give anything significant to a large group of pooerer people.and once you start taxing the rich more they simply take their money and revenues elsewhere.
BTW - the BBC have just given their usual simpering interview to Vince Cable on this topic. Needless to say the brilliant Hugh Edwards did not raise any of the points I have just made.
Guido may have a small point but he also has a large bee in his bonnet.
Athesius the Facilitator
November 10th, 2008 6:40pm Report this commentI am flumoxed with all this tax cutting mundungus. It was only a few months ago that we had the Labour and Liberal party's calling the Tory's irresponsible for promising unfunded tax cuts. Then when the Labour lot borrow 2.5 billion to cover up the 10p debacle we had toys being thrown all over the living room and now we have borrowing for tax cuts and pruning public spending for tax cuts. Lordy, lordy give me strength.
David
November 10th, 2008 6:52pm Report this commentTD is right; having looked at what the Lib Dems are actually proposing it's not actually a tax cut. It's a redistribution of minor tax charges and payments. Hopefully when the Tory proposals come out tomorrow they will simply say: "We don't need X, so we can give X back to the taxpayer." Finkelstein approached this in the wrong way; he should have lead with the paragraph you quote from the very beginning.
Blue Porcupine
November 10th, 2008 7:53pm Report this comment"LibDem tax 'cuts' are a bit of a con because its just robbing Peter to pay Paul. If you are simply taking money off someone to give to someone else - how does that stimulate demand?"
Because reducing the basic rate and funding it by increases in wealth taxes means that the money is more likely to be spent and less likely to be salted away. Spending is what we currently need.
Finkelstein is quite wrong to suddenly suggest - as he has done in today's post - that the 16p rate cut package is irrelevant because it's a redistribution rather than a cut. The stimulus it would provide to spending activity makes it highly relevant. To be honest, it all reads to me as if he's only just worked out the difference himself.
Blue Porcupine
November 10th, 2008 8:17pm Report this comment"It's a redistribution of minor tax charges and payments"
No, the basic package involves cutting the basic rate to 16p and paying for this (principally) by (a) green taxes and (b) removal of the *extra* 20% tax relief enjoyed by higher rate taxpayers on their pension contributions (i.e. in addition to the 20% relief everyone gets). I think the total package is worth something like £15bn (tax neutral). This is not by any standards a minor reform.
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