Janet Daley is getting frustrated at David Cameron’s refusal to promise and bring forward tax cuts if he is elected.
To state, as Mr Cameron and Mr Osborne do ad nauseam, that you will put economic stability “before tax cuts” is tantamount to saying that stability might well require that tax levels remain where they are.
If that is the case, then Mr Brown’s present economic policy is sound: he has got the balance between stability and tax rates exactly right. Surely they don’t mean that? So what do they mean? Presumably that tax cuts could fuel inflation, which would push up interest rates.
I don’t understand her problem. It seems to be the Tories don’t want to promote the idea of tax cuts because they fear their supporters will run away with the idea to the extent that they then can’t deliver enough. It’s almost as though there would be an overshooting of spending cuts which would harm the party’s image as well as damage public services.
The most lamentable piece in her writing:
As the Centre for Policy Studies makes luminously clear in its alternative Conservative manifesto, tax cuts are not bribes for the rich: they benefit everyone in society by rewarding work and personal responsibility, and generating economic growth. And free market economies need to grow if they are to survive - stasis is not an option. I am tired of hearing myself say this, but here it is again: reducing tax increases economic growth, which, in turn, produces more revenue for the Treasury, which means that if the Government chooses to do so, it can actually spend more.
Luminously clear? The appendix to the Centre for Policy Studies report notes that partially self-funded costs savings of £2bn to £5bn are cautious estimates based on lower end of available models. I cna’t see what models their referring to, but elsewhere in the CPS report there is reference to the Celtic Miracle:
The Irish experience has also demonstrated how cutting business taxes can lead to a dramatic rise in tax revenues.
As this paper makes quite clear, the economic conditions in Ireland in the mid 80s are quite different to the those in the UK today, and to extrapolate is fallacious reasoning.
I don’t deny there’s scope for reducing taxes. Of course there is, if we’re willing to have less public services or greater borrowing, but Why does the self-funding supply side argument refuse to die an honourable death? And as for the ‘rsing tide lifts all boats’ message. Don’t get me started.
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