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Friday, October 20, 2006

The mad aunt in the attic

Tomos Livingstone in the Western Mail this morning says that the Tories have been treating their own tax commission report as if it had been drawn up by the mad aunt in the attic. He argues that tax is starting to become an election issue once more and that, despite the fact that David Cameron and George Osborne wish to rule out the idea so as to appear less right wing, they may well be missing the mood of the Country. We will see.

The problem is that the Tories' proposals lack credibility because they are uncosted and will rightly be seen as serving self-interest. The Guardian leader sums it up:

He (George Osborne) has hardly been helped by Lord Forsyth's wrongheaded report, which lacks any sort of subtlety. It is true that Mr Brown has asked the tax system to do a lot, and this has contributed to its complexity. Simplification could limit avoidance and remove economic distortions, which should be fertile territory for the Tories. The report stresses the rhetoric, but the dash to offer eye-catching tax cuts has produced shallow solutions. An obvious option, as the Liberal Democrats argue, is reversing Mr Brown's capital gains tax changes - which aimed to boost investment, but are hard to understand for all but the rich who, with good advice, can exploit them - to fund general tax cuts. Instead, Lord Forsyth proposes even bigger rewards for select investors.

The commission's aim might have been to consolidate the message that the Conservatives will put economic stability before tax reductions. It does the opposite, proposing cuts while downplaying the impact on public spending, arguing that the plans will so boost the economy that they will partially self-finance. This is Ronald Reagan's voodoo economics. Meanwhile changes to business taxation would be worth most to the very wealthy, and the report floats a cut to the top rate of income tax that would only help the rich.

All this taints the Tory claim to have the interests of all citizens at heart. Having summoned up a report he disagrees with, the onus is on the shadow chancellor to tell voters what he wants instead. His rejection of the red meat of tax cuts is welcome. But it is not enough to make an economic policy. Lord Forsyth has had his say. Now it is Mr Osborne's turn.

I would argue that tax is the issue on which the next General Election will be fought, however that discussion will centre not on tax as an economic driver but as a means of penalising polluters, rewarding those who live in an environmentally friendly way and tackling social injustice.

The Liberal Democrats have already drawn up a set of proposals around those principles, taking some of the poorest people out of tax and removing some of the burden on middle-income families. In return they expect those with more wealth and polluters to pay more.

As the Guardian says, the real question thrown up by the Tories' Tax Commission is if these are not the proposals you are going to adopt as your policy then what will they be? Where is the beef, George?
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