Wednesday, October 18, 2006

Don't mention the tax cuts....

So trendy "new man" David Cameron, who stated at Tory Party conference last month that tax cuts were "pie in the sky" and "not what we stand for", has a few embarrassing questions to answer regarding this report due to be published tomorrow advising the Tories to cut taxes worth £21billion.

Other proposals include:

  • Reducing the basic income tax rate from 22% to 20%
  • Earnings threshold, below which people do noy pay income tax, would increase from £5,035 to £7,185
  • Abolishing stamp duty on shares and cutting business taxes
  • Abolishing inheritance tax and replacing it with a "capital gains tax on death"

The report concludes that "the total cost" to the exchequer of implementing almost all of these proposals is around £21 billion.

Shadow Chancellor George Osborne said: "The commission has given us a menu of options that merit serious consideration." And "We will, however rebalance our tax system. Green taxes on pollution will rise to pay for reductions in family taxes".

The uninteresting and boring Brownite Ed Balls argues: "The problem is there is no indication here at all how it will be paid for". You don't say!

On Channel 4 news tonight Robert Chote from the Institute for Fiscal Studies explained that there would ultimately be cuts in public spending to make up the £21 billion. The obvious winners will be people at the top while the obvious losers will be, well, the ones at the bottom. There was no mention of what the Tories intend to do with benefits and tax credits (but I can sure hazard a guess!).

Green taxes may not work if they are too successful in altering behaviour. For example if there was a green tax on petrol that did lead to people walking/pushbiking and buying smaller cars. Although the amount of duty on each gallon of fuel would be more there would be less gallons sold so less revenue. Taxation will remain a political question: how are the goodies produced by the economy (i.e. by working class people!) going to be shared out!

The happy shiny Tory mask is slipping to reveal greedy grasping Tories of old. They never went away instead got good PR and a makeover of sorts.