Sunday, August 29, 2010
Tax burden to remain for five years
This morning's Observer contains a stark warning from Treasury chief secretary, Danny Alexander that there will be no cut in the overall burden of taxation for at least five years.
The paper says that with plans already in place to reduce tax on lower earners, Danny's comments appear to dash hopes of tax cuts for the better-off and middle classes until 2015 at the earliest:
Alexander argues that the twin goals of deficit reduction and fairness, as well as plans for a greener economy, are part of the coalition agreement and will drive decisions on tax. "The plan we set out is a plan to rebalance the tax system. We need the tax revenues from the taxes we are putting up in order to help us reduce the deficit.
"But we also want to rebalance the tax system so that particularly people on lower incomes keep more of what they earn of their own money when they go out to work so that they are encouraged to go out to work.
"In due course [we will be] looking at other ways to rebalance, looking at green taxes. It is about rebalancing."
This regime is of course vital if we are to ensure that the deficit reduction programme is not just about cuts. It is a Liberal Democrat input into economic policy that the right wing Tories are going to have to swallow.
The paper says that with plans already in place to reduce tax on lower earners, Danny's comments appear to dash hopes of tax cuts for the better-off and middle classes until 2015 at the earliest:
Alexander argues that the twin goals of deficit reduction and fairness, as well as plans for a greener economy, are part of the coalition agreement and will drive decisions on tax. "The plan we set out is a plan to rebalance the tax system. We need the tax revenues from the taxes we are putting up in order to help us reduce the deficit.
"But we also want to rebalance the tax system so that particularly people on lower incomes keep more of what they earn of their own money when they go out to work so that they are encouraged to go out to work.
"In due course [we will be] looking at other ways to rebalance, looking at green taxes. It is about rebalancing."
This regime is of course vital if we are to ensure that the deficit reduction programme is not just about cuts. It is a Liberal Democrat input into economic policy that the right wing Tories are going to have to swallow.
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What about the ideas of Art Laffer on tax which many Tories support? I expect that there will be tax cuts in future budgets particularly if there is some recovery in the economy. After all it's Osborne's Rag Time band not Alexander's that is making the decisions that matter.
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