George Osborne saved the 2007 Tory conference with a tax cut. He’s recalling that mood today, elaborating on the plans to cut corporation tax which – as James detailed a while ago – will be the backbone of his first budget. Now, you may think: we know all this. Osborne has said he’d cut corporation tax from 28p to 25p and cutting the small companies rate to 20p. He had promised to go lower still, telling the CBI last April
that Britain “will need to go further if we are to keep pace with an increasingly competitive global economy” - and we have heard no more of this since. But the difference is emphasis. They are saying this will happen early (unlike inheritance cut, which has been pushed back to the end of the first parliament). This is consistent with Cameron’s promise to the CBI last November
that his “growth budget” would come in the first 50 days. But the Tories have announced 101 policies: the question for this conference is which messages they hammer home. They want to hammer home growth and the point of tax cuts. And amen to that.
If I were Osborne, I’d consider two things. First: why not talk about lifting the tax threshold and taking people out of tax altogether? Next, what’s the point of a painful VAT rise to 20% if the 50p tax will wipe it out – losing as much money as VAT will collect? I can understand that, for various political reasons, Osborne has to be seen to whack the rich. But there are ways of doing it that would actually raise money at the same time. I’d go for one of those.