Sunday, November 23, 2008

"However much Gordon wraps it up, its still a Tax Bombshell"

I'm a Conservative Parliamentary Candidate, so I've decided that this blog should do its bit. Its not often that I join a team assault, but here goes. There's but a few hours to go until Alistair Darling, the Prime Minister's proxy, delivers his Pre-Budget Report. After all the hype, I'm quite looking forward to it. The thing about being a blogger is that it makes me a commentator on politics, as well as a (sometimes partisan) participant. And I like having big issues to commentate on.

Now the first observation is that I'm very worried about our Prime Minister. I watched him on today's 'Politics Show', and I saw before my eyes a character in Dan Brown's techno-thriller, 'The Digital Fortress' made real. Commander Trevor Strathmore, Head of the NSA's Cryptography Department was a dedicated workaholic who had given his life to creating a gigantic, secret, devilishly complex code breaking machine - not unlike what I imagine a modern economy to be. Strathmore loved his country, and absolutely knew that both he and his machine were infallible. Nothing would distract him from his faith, his belief that he understood his machine like no other - even when it began wheezing unhealthily, heating uncontrollable and threatening destruction upon America. No risk was too great, because he believed. He deserved his success (and in Strathmore's case, the woman) because of his dedicated service. And the odd thing was that most expert opinion was conned into supported him - until the whole damn shooting match started to go up in flames.

Anyway, back to the prosaic. There's a lot of today's newsprint devoted to a possible cut in VAT tomorrow. Surely this is a red herring. A VAT cut will not make much difference, will not be all passed on, and delivers most of the benefit to the wealthiest sector of the nation, who may well not spend it. They'll be tempted to save it, so that they can pay the 'Tax Bombshell' that will follow in due course. No financial stimulus there. If a tax cut there is going to be, why not keep it simple and just raise allowances, taking low-earning taxpayers out of tax altogether - much more progressive, and more likely to be spent. I daresay there will be parts of tomorrow's package that I'll like though - and if I do I'll say so.

Gordon Brown does seem to have discovered a gambling gene, so anything is possible, but I still feel that tomorrow's PBR will turn out to have been over-hyped. I can see myself listening and thinking 'Is that It'? But lets assume its big, and we have tax cuts of say £30 billion. Fear of a run on Sterling means that we will have to be told how its going to be repaid, and when - which is where the 'Tax Bombshell' comes in. We are already seeing Government borrowing figures beyond anything we could ever have imagined. And another £30 billion on top. I fear for my children. Truth is that 'However much Gordon Brown wraps it up, it is still a Tax Bombshell'.

8 comments:

Pigeon Man said...

Is the Prime Minister willing to gamble away the health of the nation for one more hour in power?

The Wilted Rose said...

Now we hear of this new 45p ta band.

Brown thought his 10p tax abolition was such a wonderful policy and it came back to bite him.

The same is true of 45p. It might be a spun as a tax on the "rich", though my definition of the rich would be at least £1M - not £100K - but after they've paid tax, their mortgage and all the rest, there's not a lot left. This is just Labour's old class warfare raising its head again.

tojoevans said...

On yesterday's Politics Show Gordon Brown said, on at least three if not four occasions, that the present crisis started in America. Will someone please tell him that Nothern Rock and Bradford & Bingley are in the UK and UK owned!

Glyn Davies said...

Pigeon man - Yes, but it will fail.

Wilted Rose - Its not even going to raise much. It was just a gimmick to divert our attention from their much larger increase in NIC.

tojoevans - And Alistair Darling repeated it ad nauseum in his speech today

Sweet and Tender Hooligan said...

"from their much larger increase in NIC"

Glyn, simple question, simple answer.

Annual Salary = £20,000

NIC increase means £2 more year.

Yes or No?

I mean, fair enough, attack the report to death, it has plenty of faults, but you are scaremongering.

Glyn Davies said...

s and t hooligan - and what has this got to do with the price of parsnips. By your logic, a cut in income tax would have virtually no benefit on the same person.

The point I was making is that the Governmet leaked the tax increase to 45%, (which is not hugely unpopular) in order to hide a big increase in NIC (which is income tax in all but name, and is widely seen as a tax on jobs). This was tactically foolish, because it gave George Osborne, who is a very bright operator, an open goal.

Sweet and Tender Hooligan said...

Glyn,

£20,000

£2 a year increase.

Yes or no?

Simple answer.

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