Mar 22 2007
“Stalingrab” - the FT sums up the budget!
One of my aims in politics has been to talk the rate of income tax down to 20%. So why didn’t I crack open the champagne last night? Why doesn’t it feel better this morning?
The reason is simple - we have had to buy our own tax cut.
One of the reasons I wanted 20% tax was to provide a better incentive for enterpising people and small businesses to take a risk, invest their
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John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
As a party we can’t argue against a 20p income tax rate or a 28p corporation tax rate. We gave Gordon Brown an open goal, and he took it. I hope the leadership now argues for less government spending and lower taxes instead of being wrong footed on tax and spending as it was yesterday, and doesn’t fall into the sharing the proceeds of growth nonsense - on the one hand we complain of excessive waste of public funding by this government then we say we’re going to spend as much as Labour if not more.
This ‘tax cutting’ budget may have been an embarrassment to the Tories, fancy being wrong footed by Labour on tax cuts, Tax cuts!! But if used properly by the opposition, it could be used against Labour in future, after all they have conceeded the desiribility of cutting taxes, that must be a first for Labour - ever.
That Letwin and Cameron could let in such a home goal is extraordinary. But it is a result of their timididy when advocating Tory policies, it has been a mistake to pretend to be Blue Labour.
At this point in the life of this government, ‘people’ actually want something different. They are tired of Labour and the lies and cash for peers, destructive tinkering with the constitutiion. and frankly I don’t see why Gordon Brown should succeed to be Prime minister, if he does, then the role of deputy prime minister ought to be abolished, it was after all only a sop to Michael Hestletine’s enormous ego.
The fact is, we don’t want a change from New Labour, only to find we have got more of the same, only with a different name ‘Blue Labour’ AKA the ‘new’ Tory party.
The corporation tax cut is good & somewhat wrongfoots the Tories. Ireland has managed 7% average growth which is why it is now as wealthy per capita as the USA. Gordon cutting to 28% is obviously not comparable as Ireland cutting to 12.5% & its good effect will be that much diluted but still a step in the right direction. If he can’t afford any more than that Gordon should have promised that increases in the CT take will be returned in the form of further rate cuts. The Laffer curve being what it is this would probably amount to a cut in the rate, if not amended for inflation, of about 5% or 2p per year. A long term commitment like that would be good for business confidence. If the Tories were to do this they would partly regain the initiative Brown has taken. If both parties were to make a long term commitment to letting CT wither the benefit to business confidence would be redoubled.
It is worth pointing out that in Scotland, the SNP, a nominally social democrat party, have committed to Irish style cuts to grow the economy & this has been a major factor in their increased popularity. If they do well I hope the Westminster parties, who appear to have barely noticed Ireland’s economic miracle, will notice the SNP’s electoral miracle.