Monday, July 27, 2009
The Tories and tax
In this brave new world where politicians tell the voters the truth about what is and is not possible in the face of record government debt and a deep recession, the number of such admissions is starting to grow.
Next up are the Conservatives who, according to The Times are going to impose tolls on drivers who wish to use newly built roads so as to pay for that investment. Is this the case of a deeply Euro sceptic Tory leader compensating for the free market offered to members of the European Union by imposing trade barriers within his own national boundaries? Or is it just economic reality?
Either way the experience elsewhere is that faced with a toll the majority of drivers will just look for other routes. The exception is of course toll bridges when those routes are not available but certainly one of the reasons why the M4 extension around Newport was abandoned was because the tolls needed to pay for it were not a practical proposition.
Meanwhile the flagship Tory policy of taking richer families out of inheritance tax has also been put on the back-burner. It seems that this could be delayed by up to five years until the Treasury books are in order. Poorer families could feel the brunt of Tory cuts much sooner. David Cameron has let it be known that tax credit payments to middle-class households could be scrapped, in a drive to reduce government spending.
What exactly this means is difficult to fathom. Tax credits are payable to families who receive less than a certain net income after taking into account a whole range of factors including the number of children, outgoings etc. The system is complex and confusing and often leads to problems with overpayments and clawbacks due to the inflexibility of the way it is operated. There is no doubt that tax credits are in need of reform but downrating the income qualification does not hack it. Unless you do a root and branch review then crudely the Tories will just be taking money off struggling middle class families to pass onto those who inherit an estate in excess of £325,000. Not much equality there.
Next up are the Conservatives who, according to The Times are going to impose tolls on drivers who wish to use newly built roads so as to pay for that investment. Is this the case of a deeply Euro sceptic Tory leader compensating for the free market offered to members of the European Union by imposing trade barriers within his own national boundaries? Or is it just economic reality?
Either way the experience elsewhere is that faced with a toll the majority of drivers will just look for other routes. The exception is of course toll bridges when those routes are not available but certainly one of the reasons why the M4 extension around Newport was abandoned was because the tolls needed to pay for it were not a practical proposition.
Meanwhile the flagship Tory policy of taking richer families out of inheritance tax has also been put on the back-burner. It seems that this could be delayed by up to five years until the Treasury books are in order. Poorer families could feel the brunt of Tory cuts much sooner. David Cameron has let it be known that tax credit payments to middle-class households could be scrapped, in a drive to reduce government spending.
What exactly this means is difficult to fathom. Tax credits are payable to families who receive less than a certain net income after taking into account a whole range of factors including the number of children, outgoings etc. The system is complex and confusing and often leads to problems with overpayments and clawbacks due to the inflexibility of the way it is operated. There is no doubt that tax credits are in need of reform but downrating the income qualification does not hack it. Unless you do a root and branch review then crudely the Tories will just be taking money off struggling middle class families to pass onto those who inherit an estate in excess of £325,000. Not much equality there.
