Thursday, July 12, 2007

Tax...

So, tax cuts are back on the agenda. The risk for David Cameron has always been that on taxes Gordon Brown has the ball. Whatever Cameron says, the Government has the power to make real changes to the system. So it's interesting that the Lib Dems have jumped into the area with both sandals. The minutiae of the proposals are not really the point - it looks like a broadly neutral policy, though these usually seem to end up raising taxes rather than the opposite. The shift in emphasis from taxing income to taxing behaviour is a predictable continuation of a trend that has been evident for a considerable time.

The two questions are how will Brown respond, and how will Cameron respond? Brown must surely realise that he has the perfect opportunity to give Cameron a good thumping from the right - all he has to do is announce a real tax cut shortly before the next election. That would really put the cat among the pigeons - anything Cameron did in response would look like either panic, out-of-touchness, or opportunistic me-tooism. It would be the right strategic move from Brown - who has always been excellent at long-term strategy. Can he do it though? Everything he has done so far has been redolent of an attempt to address perceived character flaws. The problem is that the reason they are o widely perceived is that there is so much evidence of them. Brown is trying to re-invent his character at 58 - no easy task. He is bound to revert to type sooner or later. Cutting taxes might be one step too far.

As for Cameron? He should stress that this is a minor shuffling of the tax burden, and that the moving of the burden from direct to indirect taxation will hurt the poor more than the reduction in their income tax will help them. He should also point out that he still believes in a lowering of the overall burden of taxes and that the proposed re-introduction of locally-set business rates show how anti-business the Lib Dems are. Ultimately, however, the man with the capacity to make taxation a frontline issue is still Brown.

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