It’s pre budget silliness time at the Daily Express, prompted by its friends in the Taxpayer’s Alliance:
Alistair Darling is under pressure to slap a punitive new income tax rate of up to 70 per cent on top earners in a “tax-the-rich” mini-Budget next week, it emerged last night. Treasury officials are pressing the Chancellor to further hike taxation in his autumn Pre-Budget Report next Wednesday to raise cash for easing the Government’s spiralling debt crisis.
This is nonsense: I am certain there is no such plan at all — the Treasury is no fan of high tax rates.
Of course it’s true that:
Labour MPs are urging Mr Darling to hike taxes on the better off in an attempt to trap the Tories into appearing as defenders of wealth and privilege. And in a separate move, a left-wing pressure group is drawing up plans for an independent “high pay commission” to campaign for draconian curbs on income.
Who else is going to pay, the Express might like to ask? Its readers? This glaringly obvious point seems to have passed the Express by.
But the TPA gets its moment of glory. After all, where would the Express be without them?
Susie Squire, of the TaxPayers’ Alliance campaign group, said: “There is every danger that the Government could push up taxation in the Pre-Budget Report.
“It would damage ambition and aspiration, and discourage the investment the UK needs to lift the economy out of crisis. These suggestions are all about political point scoring rather than what the economy needs.”
Susie needs to learn some economics. David Blanchflower — formerly of the Bank of England Monetary Policy Committee provided one at her level in the Mirror in October:
The plans that David Cameron and George Osborne outlined this week are the most wildly dangerous economic proposals that Britain has seen in the past 100 years.
They show absolutely no understanding of basic economics.
You don't cut public spending in a recession. No ifs, no buts. It's as simple as that.
We are still in the depths of the deepest recession of our lifetimes and the Tories look like making a similar policy error. It's 1937 all over again.
Just like in medicine, a fundamental principle of economics has to be to do no harm.
Monetary and fiscal stimulus has so far kept us out of a depression and will keep doing so as long as stimulus continues.
John Maynard Keynes taught us that the appropriate policy in a recession to stop it turning into a depression is to raise public spending.
That is what is being planned now. Not tax increases (although they will come — later). And definitely not mad spending cuts.
But what is the TPA really worried about?
Gordon Brown refused to rule out hikes in inheritance tax in the Commons yesterday. Other crippling tax increases thought to be under discussion include: widening the net of the 50p income tax rate beyond the current threshold of £150,000 a year; hiking Capital Gains Tax from 18 per cent to 25 per cent; and raising National Insurance contributions for top rate taxpayers. A new onslaught on tax loopholes and avoidance is also expected as the Treasury has vowed to “tilt the game back towards honest, hard-working taxpayers.”
Well, I rather hope that is what the Treasury is thinking in due course — because much of it comes from the Compass tax report — and not the Treasury itself. But Compass, the TUC, the Green New Deal and all other tax reports room the Left are saying one thing in unison — it’s spend first, tax rises later and there is no room for cuts — because they just won’t work.
But the assembled tax profession is lining up alongside the uninformed of the Taxpayer’s Alliance:
Some tax advisers are warning better-off households to brace themselves for crippling tax hikes on family wealth. Lisa Cornwell, of private bank Kleinwort Benson, said: “We think capital gains tax is unlikely to stay at 18 per cent. It is perceived as something the very wealthy pay.”
But Chris Sanger, of Ernst & Young and a former adviser to Gordon Brown, said Labour could be hit by a massive backlash. “Inheritance tax is the tax everyone aspires to pay,” he said.
What an unholy alliance: merchant bankers and E & Y — a firm with a long history of fines for tax and audit abuse.
I guess that sums the debate up — do we want a fair open society in which those who an afford to pay do pay, or not? It’s clear where the Express and TPA stand, Some of us have different opinion.