Thursday, June 08, 2006
New Look For Haberdashery Department
You almost feel sorry for the Lib Dems: collapsing poll ratings, scared to death by Cameron, and led by a minger. And now they've come up with a tax package that seems designed to alienate the very Middle England voters they depend on.
To start with the good points. At least they're now talking about cutting taxes rather than raising them. And their proposed reductions in income tax are substantial: 2p off the standard rate, an increase in the personal allowance to £7,000, and an increase in the 40p threshold to £50,000. Both common sense and the economic evidence tell us that would incentivise work and increase growth.
But the bad points are pretty bad. To start with, as with so much LD fiscal doodling, it's not at all clear the sums add up. £20bn is a big cut in income tax, which implies some massive rises elsewhere. Blithely assuming you can somehow just get it from higher environmental taxes and another pensions hit is so much wishful thinking.
And then, as Iain Dale points out, while Ming reckons only polluters and the super-rich would suffer from his new taxes, in reality it would be middle income earners. A further £5bn on capital gains tax, plus another £7bn off tax relief on pensions contributions, would certainly hit somebody- but it wouldn't be the internationally footloose and professionally advised super-rich. The £26,000 pa it's reckoned some could lose would fall squarely on Middle England.
Of course, we know these LD tax plans are just more of that overplayed "mood music"- they're never actually meant to be enacted. But just as their half-baked Local Income Tax plan cost them Guildford, Maidenhead, and a score of other Home Counties seats last year, this package could also tum out to have hidden bite.
What a pity the LDs aren't presenting us with a real package. One that started from the straightforward proposition that the overall tax burden must be cut.
Why can you never find an Orange Booker when you need one?
Posted by Mike D at 2:35 pm