Didn’t take Mandy long to get revenge on Osborne for grassing him up about their cosy Corfu taverna gossip. Maguire reports this morning the rumour that Osborne “turned the air blue and ridiculed defence spokesman Liam Fox as a “s**t” in an incredible four-letter tirade.” Is this news?

If all our economic woes are made in America as Gordon claims, why is that their economy is showing healthy growth (despite high oil prices) and the U.K. economy is flat-lining?

Could it have something to do with George Bush’s timely $150 billion bi-partisan growth stimulus package in February? Both the Democrats and Republicans are running on tax cutting platforms. We have bi-partisan tax and spend sloth policies. Guido understands the politics of it, the economics of it are what disappoints. The Finkelstein “you can’t win promising tax cuts” approach was always timid, it is now the wrong strategy at the wrong time. The voters have moved on, they recognise the economy needs tax cuts to grow.

Guido popped down this morning to the Demos Ikea showroom / think tank to hear what the 18th (to be) Baronet of Ballintaylor in the County of Tipperary and heir to a fortune had to say on “fairness”. George Osborne’s pamphlet is here and the speech echoed the charges that inequality has increased under New Labour. Strangely Guido thinks that New Labour is too afraid to defend itself on this issue.

Relative poverty has increased only because we have generally got richer. Absolute poverty has not increased. The problem for those who put equality before liberty is that they are too embarrassed to say that whilst we have all in aggregate got richer, some have got even richer, even faster. So What? Essentially if you believe in the conceptual value of the idea of “relative poverty” you believe that if Warren Buffet moved to London poverty would increase. Britons would after all now be relatively poorer compared to the average. If George when he becomes Chancellor succeeds in driving rich, non-domiciles away from British shores he will be able to claim he has reduced relative poverty. Not one single poor person’s absolute circumstances will have changed (apart perhaps from a few more unemployed domestic staff ). Splendid, Polly Toynbee will be pleased.

There was a moment of comedy when an extremely bedraggled looking Derek Draper piped up with a question from the back. Osborne congratulated him “on his new role as psychological consultant to the PM. Good luck with that.” Osborne was also quizzed about the ideological incoherency of all this cross-party triangulation on poverty and social justice. He said something wonkish about there being a continuum of political thinking from himself through Alan Milburn to Brown with the same long term goal.

Osborne took the opportunity to praise Alan Milburn. Mischievously saying, to much laughter, that he also shared with Milburn “his short term goals”…

Sam Coates over at Red Box has been documenting the difficulties in luring donors to Gordon’s big Wembley fundraiser tonight:

Apparently Alastair Campbell is frantically texting round the great and the good to try and drum up numbers for tomorrow night’s Labour fundraiser at Wembley. Bit late now… One person has apparently been phoned 8 times asked to buy a c. £15,000 table. Still saying no.

In contrast, the room last night for George Osborne’s speech was full, not just with young thrusting Cameroon boys and girls, but with an extraordinaryly large number of civil servant high fliers, no doubt eager to know what the new masters will demand of them. In the words of Bob Dylan:

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.

Hong Kong is nominally now under communist control, yet has a low income tax rate of 16%, a free market economy and limited government. This combined with its free trade port status makes it a reform model for the developing post-communist world.

It consistently tops the Reaganite Heritage Foundation’s Index of Economic Freedom. Judging by reports Vince Cable would love it here – at an off-the-record* post-budget briefing he gave to clients of pollsters ComRes, he lauded Nigel Lawson’s tax reforms and Ronald Reagan’s rolling back of big government. Vince was happily quoting Reagan’s dictum that the most chilling thing you can be told is “We’re from the government and we are here to help you.”

As George Osborne promises to stick to Gordon Brown’s tax and over-spend policies, maybe the most fertile political ground for the LibDems to stake out is to be liberal on economics rather than social democrat. The centre-right German Free Democrats and the Irish Progressive Democrats have been in government more often than not since the late 80s, despite being small liberal parties. Something to think about as we contemplate a hung parliament…

UPDATE : Have just discovered that the Hong Kong finance minister has now abolished all taxes on wine and beer. How refreshingly civilised…

They have also introduced Green tax cuts! Financial Secretary John Tsang also announced last month tax incentives for “Greener” vehicles and a concessionary profits tax reduction for capital expenditure on “Greener” machinery and equipment. Corporate taxes were also reduced this year 1% to 16.5%. Pay attention Osborne at the back.

The Shadow Chief Secretary to the Treasury, Philip Hammond, gave an off-camera briefing ahead of the Budget yesterday lunchtime. Not quite sure how this squares with Dave’s commitment to the “New Politics“ of openness and transparency or his boss George Osborne’s “open source politics 2.0“ which he said would see a Tory government “become more accountable, more transparent and more accessible – and so bridge the growing gap between government and governed.” Having an off camera briefing in the Lobby room seems less than transparent and rather inaccessible to the governed.

Perhaps he has good reason to explain Tory economic policy out of sight, being too timid to put the case for tax relief for the struggling middle classes and reducing state over-spending. The Tories basically accept that because of the dire fiscal position Chancellor Osborne will stick with Gordon Brown’s tax and spending plans. As we tip towards worldwide recession and a global financial crisis the Tories are advocating “tax hikes on alcopops!” and the LibDems “tax cuts for smoothies!” Pathetically unambitious.

Later this morning Osborne will deliver a speech on tax simplification. 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.

Polly Toynbee is wailing in her column this morning about the Chancellor’s U-turn. She reckons it is the “FT Wot Won It” and that Digby is Jones is the Thatcherite vetoing policy in Brown’s Big Tent. On one point Guido is in agreement with her; Labour claim they will take £650 million from non-doms, while the Tories claim they will squeeze them for £3.5 billion. Labour will tax them only after they have lived in Britain for seven years, whereas the Tories will tax them from day one.

So won’t the Tory policy drive more globally mobile wealth creators out of London? Isn’t Osborne’s policy worse for the City and more punitive?

Michael Spencer, the demi-billionaire Tory treasurer and boss of the City money broking powerhouse ICAP, had an article in The Times criticising Brown and Darling’s plans to drive foreign businessman out of London to Monaco.

Guido suspects that Spencer doesn’t think Osborne’s own plans for non-doms are so brilliant either, he implausibly says the Tory version of the policy was “broadly welcomed” when he took City soundings. Broadly welcomed by whom?

Phil Hammond is defending the plans rather meekly, whereas Michael Fallon, a Tory member of the Treasury Select Committee, tells the FT bluntly “Chasing non-doms out of London is a huge mistake … Why do we want to lose all that business to Luxembourg or Dublin or Geneva?”

The US Embassy has made their view known and is lobbying hard to persuade the Treasury to change the wording of its legislation to ensure the charge falls within the scope of the double taxation treaty. The Chancellor’s plans will actually cost the Treasury money, according to a study by the Society of Trust and Estate Practitioners: the £30,000 annual levy will cost £2.1 billion a year as many residents will leave the country. The 116,000 non-doms are mostly not tycoons but bank, hedge fund and private equity staff who bring investment and prosperity. The problem for the Tories with having their policy stolen by Gordon is that they can’t attack his even worse version without highlighting the problems with their own. The Treasury and Osborne should realise that the elasticity in the Laffer Curve applies even more to foreigners.

Digby Jones is a pro-business Thatcherite so going into Gordon’s big tent was always going to involve him holding his nose. In the morning’s FT he says he wasn’t consulted over Labour’s copycat plan to tax foreign businessman, that it is not popular with businessman he meets as he tries to drum up inward investment. Shooting the golden goose is crazy, wealthy foreigners boost the economy. Osborne should know better. Digby knows it, the City knows it, but they don’t have any votes.