Peter Hoskin

Osborne and Johnson battle over the new tax divide

Osborne and Johnson battle over the new tax divide
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Now here's a thing: a radio appearance by Alan Johnson that actually clarified some details about Labour's economic policy in the Miliband era. Sure, the shadow chancellor spent most of his time on the Today Programme setting about the coalition's VAT hike, with all the usual arguments about jobs and growth. But there was also confirmation that Labour's deficit reduction plan would split 60-40 between tax rises and spending cuts, and that they would raise national insurance levels rather than VAT.

It repositions the argument some way beyond the simple Do/Don't divide that was developing around VAT. Now there are two choices for voters to make. Do they prefer a deficit reduction plan which, for the first time, emphasises tax hikes over spending cuts? And do they prefer to effectively be taxed on their spending power (via national insurance) rather than their spending (via VAT)? These are questions of such basic heft that they will no doubt persist until the next election.

But just because Johnson is filling in some of the blanks, it doesn't mean that he's filling them in correctly. For starters, it hardly inspires confidence that Labour have shifted from a 70-30 divide between spending cuts and tax rises before the election, to 60-40 a few weeks ago, to 40-60 now. Where, I wonder, will it be next week? And then there's the little matter of hiking up national insurance. The Tories drew blood when Labour proposed to do the same last May – citing it as a "tax on jobs" – and they will sense an opportunity this time around.

Indeed, George Osborne put in a confident performance afterwards on Today. A sturdy argument for his VAT policy was punctuated by razor-tooth asides about Johnson's own tax rise. Make no mistake, this will not be a straightforward period for the coalition: rising costs are colliding with issues of trust. But at least they now have Labour policies to attack, as well as their own policies to defend.