Monday, March 23, 2009

The Tories and tax

The Tories have got themselves into a bit of a muddle on the whole question of taxation.  This is rather frustrating as the beginnings of a clear and understandable Tory message on the economy was just starting to emerge: namely that the nation’s finances are close to be being utterly ruined, and that fairly drastic measures are going to be needed to pull it round.

The problem is that, although this over-riding message is becoming clearer, the detailed policies behind it are a bit contradictory.  Fraser Nelson has a very good point here:

Cameron's original poster claimed a baby born in Britain is saddled with £17,000 of Brown's debt. Under the plans the Tories are pursuing - ie, raise spending regardless of the tax base - this figure would be £27,000 by the end of a Tory government.

The possibility remains that the Tories are trying to set the mood music – that big cuts are urgently needed – before spelling out precisely what and where.  Given that the Government have clearly decided to fight the next election as an opposition rather than an incumbent, for that is the implication behind abandoning the Comprehensive Spending Review, how many hostages to fortune can the Tories afford to leave?

This, I suspect, is what is behind the two big bits of trouble over the Tories’ tax plans, the 45p rate and Clarke’s little moment over IHT.  The point is that the public finances really are screwed – quite how badly the Tories won’t know until they get their hands on the Treasury’s internal figures.  But how far can that message – we don’t yet know what we’ll have to do, but trust us – work for a party that hasn’t been in power for over a decade?

As an aside, it’s hard not to admire the Government’s chutzpah over all of this.  Ken Clarke’s point was basically that, owing to the spectacular mismanagement of the public finances by the Labour Government, coupled with their dissembling as to their true nature, Conservative economic policies would be largely dependent on how bad it really was.  The Government’s reaction: this is proof that the Tories are unfit for Government.  As I say, you have to admire the cheek.

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