Articles and Speeches

Budget is at Tax Con not a Tax Cut!
23-Mar-07, Windsor Express Article.

The Budget this week was a curious affair. The Chancellor’s attempt to grab the headlines was reminiscent of an election year as he announced a reduction in the income tax rate from 22p to 20p in the pound. At first glance it seemed like a big win for tax payers as the Chancellor appeared to adopt the Conservative position of sharing the proceeds of growth.

But as ever with this Chancellor, the devil is in the detail. His abolition of the 10p tax threshold and changes to national insurance contributions mean that he has raised an extra £8b in tax! Few will be better off, and the least well off will be hit the hardest.

Doctors, nurses and teachers will all be hit by this tax hike but will not even be rewarded by an increase in spending in hospitals and schools. Spending on education will hardly rise and the Chancellor’s announcement of an increase in spending on the NHS of £10bn is not new money, but money that has already been promised.

Business is the engine of the economy that creates all of the jobs, incomes and taxes that pay for the good causes we wish to support in a caring society. So it’s shocking that we’ve fallen from being the 4th most competitive economy in the world in 1997 – to a lowly 10th. Had the Chancellor announced measures which would have released productivity (now half the rate it was 10 years ago) and reduced the tax burden on business, our competitiveness could have been enhanced and our economy would look a lot healthier in the long term.

After inheriting a golden economic legacy, we must not forget that Brown is the architect of the problems and it will be interesting to see how he will argue that he holds the solution should he become the next Prime Minister.

Overall, this Budget is a tax con, not a tax cut!