Monday, September 12, 2011

Tax principles?

With Vince Cable apparently threatening the nuclear option of resigning if the banking changes aren't carried through, perhaps more interesting is the apparent fight over the future of the 50p tax rate. 


Chris Huhne is quoted as saying
If the cut in the top rate of tax is just a way of helping the Conservatives' friends in the City to put their feet up, then forget it. They are simply not going to get the votes in the House of Commons.
And Danny Alexander added that
Our priority is to reduce the tax burden for people on low and middle incomes. I think the last thing we need at a time when everyone in the country is feeling the pinch, where we are asking people across all parts of the economy to help contribute to those efforts to deal with the economic problems, to have a focus on the tax burden for the wealthiest. 

All this follows on from Vince Cable's comments last month, which proved the opening salvoes of this little battle 
I and my Liberal Democrat colleagues have always made it clear that if there is scope for cutting taxes and, there isn’t a great deal for scope at the moment, the priority is cutting taxes for people on low and middle incomes
Clearly, they are quite right. Cutting the top rate of tax at the moment would send all the wrong signals, despite some of the wilder claims from the right, who appear to think that we should incentivise the rich by cutting taxes, but challenge the poor by cutting their income. On the one hand, this is a restatement of Liberal Democrat principles, but on the other, it is ideally placed to deflect some of the discontent that is to be expected at this week's party conference right here in Birmingham. More broadly, it also puts some clear water between the Tories and the LibDems, thinking ahead to the general election campaign of 2015, when that gap may be the difference between electoral annihilation and the survival of a rump of MPs. It might even provide an opportunity to engineer a political separation prior to the election as the sense self-preservation becomes overwhelming. 


Whether anyone actually buys this political posturing as an example of principle is a different matter and on the current attitudes of the electorate towards the Liberal Democrats, few will. 

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