“BBC political editor Nick Robinson said the fact that a series of countries now look likely to implement packages of tax cuts and spending increases would allow Mr Brown to claim the UK is in the lead when it came to dealing with the economic crisis.”
Brown cuts taxes… Osborne doesn’t find room for serious tax cuts… Infighting breaks out inside Tory Party… Lots of interest rate cuts… Caroline Spelman forced to resign over nannygate… Barack meets Brown… Then narrow Labour election win early next year…
Feasible? Gordon is clearly going to throw some bribes the electorate’s way next year. In that context the Osborne-Letwin “no punk tax cuts” hair-shirt is political masochism.
If Labour does a Bush-style tax rebate, and Guido will not be in the least surprised if Gordon performs the mother of all U-turns, Osborne could talk about budget deficits, Gilt-yields and sound money until he is blue in the face. The electorate will see tax rebate cheques and the shadow chancellor saying they shouldn’t have ‘em…
The Tories need to follow the LibDem lead (not a phrase often seen). Point to the £20 billion in savings identified. £20 billion is 3% of government expenditure, expenditure which has nearly doubled under New Labour. Dropping ID cards alone could save nearly half that amount. It costs some £6 billion to raise thresholds £1,000 for everbody, it will defuse the Tory Tax Bomb blowing up in their face.
Back in February George Bush pushed through a tax cut based growth package with bi-partisan support. Reported on this blog thus:
Guido looks at the economy and sees real trouble ahead, it needs decisive action, not hand-wringing words from politicians about tax simplification. The property market is seized up and consumer confidence is draining away. A massive pro-growth tax package is required now, the earlier the better. George Bush is pushing a bi-partisan growth package targeting $150 billion in tax relief at individuals and businesses to kick-start private sector spending. That is a stimulus equal to 1% of U.S. GDP.
Speaking at an interfaith conference at the UN General Assembly in New York this morning, Gordon Brown has just called for global tax cuts, “a temporary and affordable fiscal stimulus” was needed to tackle the downturn he said. Gordon told journalists that he intends to ask leaders at the G20 summit to produce fiscal stimulus packages of tax cuts and spending increases to “stimulate growth in our economies”.
Perhaps Gordon didn’t notice that George Bush actually got his temporary stimulus in at the beginning of the year, whilst our far-sighted financial genius has yet to even announce his growth package, which is probably why US GDP growth last quarter was not quite as bad as UK GDP growth (-0.5). How is he going to blame that on America?
Gordon also warned against protectionism, a strategy that has proved to be “the road to economic ruin in the past”. Obama ran on a protectionist ticket.
The Tories are calling it a “tax con”, because debt may rise and taxes may have to go up later, of course if we don’t cut taxes and growth is even worse, tax revenues may well still fall and government debt will rise anyway. Under the Tory plan however the economy will have been additionally weakened by the heavier tax burden. This used to be orthodox Conservative economic analysis, it seems the last supporters of Brownite fiscal rules are in the Tory treasury team…
- To present himself as the respected elder statesman of international finance – never mind Sarko’s pretensions.
- To frame Britain’s problems in an international context. Sterling’s collapse is to be spun as nothing to do with Brown’s bubble.
- To frame any domestic tax cut U-turn as a co-ordinated international action. This will give him cover for abandoning everything he has told us is important for all his front-bench political life.
Why Gordon thinks it imperative to be portrayed as some kind of respected international finance genius eludes Guido. It won’t save anyone’s job, not even his own.
There is obviously an international angle to the credit crunch, but there are also domestic disasters which happened on his watch.. Sterling’s collapse is not random. Who for instance decided to exclude house prices from the Bank of England’s inflation target which meant we had a ridiculously loose monetary policy?
If the G20 endorses a policy of tax cuts - if – Gordon will have political covering fire to return to Westminster to cut taxes and bugger the deficit. The Pre-Budget Report on Monday week will be his chance to unveil an epic tax-cutting stimulus package U-turn. The Osborne-Letwin* designed response as it stands will be “we shouldn’t be here, you shouldn’t do that”. Preaching fiscal sobriety to the fiscally hungover after the party has finished and the house is already wrecked.
The Tories have boxed themselves into holding to a Brown orthodoxy on tax cuts to which he himself no longer adheres. Time to think outside of the box…
*Letwin’s aversion to tax cuts might have something to do with the 2001 election campaign fiasco when as a junior finance spokesman, he was forced into hiding after disclosing that the Tories had longer-term plans for £20 billion of tax cuts.
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Zac Goldsmith: “The hon. Gentleman might like to know that today’s Guido Fawkes quote of the day is the one on drug laws that we have heard cited by a number of hon. Members.”
Mike Hancock: “I am delighted to hear that Guido Fawkes is talking about something other than me.”