The Budget negotiations within government are now underway. The quad of Cameron, Clegg, Osborne and Alexander held a meeting last week to discuss their priorities for the Budget on March 21st. They’ll continue this conversation over a working dinner tomorrow night.
Already, we know that the Liberal Democrats main priority will be to get the personal allowance as close to £10,000 as possible. As The Sunday Times reports, they’re suggesting paying for this by taking away various reliefs for higher-rate taxpayers and closing some of the loopholes in the tax system. I also understand from Liberal Democrats close to Clegg that they’re also interested in some new green taxes.
For the Tories, one of the political imperatives is to deal with the ‘cliff-edge’ problem that comes with taking child benefit away from households with a higher-rate taxpayer. Cameron has repeatedly reassured Tory MPs that this problem will be dealt with. But it is very hard to do this without complicating the tax system still further.
The Sunday Telegraph leads on discontent on the Tory right about the fact that tax breaks for married couples will again not feature in the Budget. But Number 11 will note that it is only the usual suspects prepared to complain publicly about this at the moment. Indeed, I suspect that any tax breaks for married couples — a thoroughly sensible idea to my mind — will have to wait for a majority Tory government.