Ed Balls claims unconvincingly…

“My instinct is that you should always try to reduce every tax if you can…”

The best policy idea to come out of LibDem conference was Danny Alexander’s call for tax thresholds to be raised to £12,500, effectively taking minimum wage earners out of income tax. Reversing Gordon Brown’s complicated tax – the – poor – and – pay – them – benefits strategy. Brown effectively and deliberately made those in work on low earnings recipients of welfare benefits. Brown wanted everyone to be on state benefits (welfare “universalism”) for purely political reasons so as to maximise buy-in from all classes into the welfare state. Hence the cynical Brown/Balls attachment to child benefit for millionaire mums and winter fuel allowances for Michael Winner.

Raising the tax threshold is simple, has popular appeal and will benefit those on low earnings proportionately more than those on higher earnings. It will take some pressure off the “squeezed middle” and won’t increase the welfare trap. It isn’t a perfect policy, prominent Orange-booker Mark Littlewood, a wonk the Institute for Economic Affairs, is wary that it will result in millions of voters being unaffected by the basic rate of income tax who therefore won’t be incentivised to vote for parties and policies that favour lower taxes. He fears that low-earners will have no reason to buy-in to tax cuts if they are taken out of the income tax bracket entirely.

The organised opposition to this policy however is coming from the left-wing, EU-funded think-tank IPPR. The IPPR was founded and funded by the unions back in the Kinnock era to drag the Labour Party to the centre, in the post New Labour era and under new management it is dragging the Labour Party away from the centre towards the left. IPPR is arguing against raising tax thresholds because it won’t help the poorest who are on benefits and not working. This criticism cuts no ice because tax cuts, by definition, are designed to help taxpayers. IPPR argues that targeting benefits, sprecifically towards childcare, would be more effective and cheaper. It is as if they are speaking a different language, the problem of welfare dependency won’t be solved by paying out more benefits.

Nevertheless Guido wishes IPPR well, their wonkish sophistry may well appeal to Ed Miliband. If in 2015 the coalition parties are standing on a platform of reducing taxes on the working poor with the Labour Party standing on a platform of taxing the poor, Miliband will be on the wrong side of the dividing line. “Vote Labour and tax the poor” is a winning campaign slogan – for the coalition parties.

The FT’s cerebral editor Lionel Barber gave the Fulbright Lecture last night about media matters of concern to the chatterati (“The Future of News and Newspapers in the Digital Revolution“). Barber joins the chorus for a Media Standards Commission, with teeth, to replace the discredited Press Complaints Commission.

Of interest to Guido was that he wants the regulator’s remit to cover blogs:

Should the new system embrace new media such as the Huffington Post UK or individual political bloggers such as Guido Fawkes?  My answer is Yes, not simply in the interests of a level playing field but also because the distinction between old and new media are rapidly becoming meaningless in the new digital eco-system.  New media is moving into reporting. Old media is blogging and tweeting, and using social media to promote and distribute news and analysis around the world.

If bloggers don’t cooperate he wants “a statutory levy on advertising revenues for non-participants, with such levies being used to fund the new body”. Good luck with that, because it will require some extra-territorial innovations in international law. It is never going to happen, you’ll have to prise the keyboard out of Guido’s cold dead hands…

Tomorrow VAT in Ireland will be slashed to 9% on discretionary spending and the tourist industry. When they did this for restaurants and hotels in France at the beginning of 2009, it’s reckoned that around 29,500 jobs were created in the entertainment industry. The British Beer & Pub Association are putting the pressure on for a similar move to take place in the UK:

“Cutting VAT could create thousands of jobs in British pubs, bars and restaurants, boosting tax revenues, and helping out consumers. It’s time for the UK to catch up. With this sensible, job-creating move, Ireland is just the latest in a long line of EU countries to cut VAT on food in the hospitality sector, with the UK looking increasingly like the ‘odd one out’”

Guido won’t say this very often, but, Balls is right on this one, a nice summer VAT cut would do wonders for consumer spending, confidence and growth.

The pen-pushers at IPSA are meant to restore confidence in the expenses system and avoid the pitfalls of paperwork cock-ups, deliberate or not, that have blighted Parliament for so long. Red faces all round then as it seems thousands of MPs staff will get a bit of a shock when they open their annual P60 certificate.

When IPSA was founded, they  hammered home the fact that Members would remain the legal employer of their staff. Their contracts make this very clear:

Staff pay-slips back this up. However, the P60 end of year tax certificates, sent to every staffer, state that the employer is “IPSA 7th floor, Portland House, Bressenden Place, London, SW1E 5BH”:

Simply not the case.

A P60 is proof that tax has been paid and the details are meant to be watertight. Guido understands this is what is known technically as “a massive cock-up” rather than a deliberate shift in the employment rules. IPSA have made clear they will replace the P60 with a correct one if staff complain, but it seems they weren’t going to announce the blunder publicly. MPs will be chortling into their subsidised pints that IPSA has messed up their own paperwork. The fact that IPSA can’t get something as basic  as Parliament’s P60′s right, doesn’t bode well for the rest of their duties…

Data released today by the Office for National Statistics showed UK retail sales slumped during May. Including fuel, sales volumes fell by 1.4% last month, while excluding automotive fuel volumes decreased by 1.6%. George Osborne believes that lower tax economies are higher growth economies, he told us so many times in opposition. Just because Ed Balls advocates it today doesn’t automatically make it wrong to cut VAT. Balls is calling for a temporary suspension of the VAT hike to boost consumer spending and growth. Why not?

Douglas Carswell has spotted a Statutory Instrument slipped in before parliament without prior debate, two pages of legislation which will cost the British taxpayer £9 billion, the equivalent of adding some 1½p to the basic rate of income tax. No debate, no big announcement, just another day of propping up the Eurozone on the backs of UK taxpayers.

The Chancellor was at the Bilderberg conference this weekend, where the global elite discuss important matters without tiresome worries like democracy or transparency, among the attendees were central bankers, financiers and investment bankers – the guilty men of the financial crisis. The Chancellor has clearly fallen in with a bad crowd…

UPDATE: Osborne’s PPS Greg Hands has been rolled out to defend the £9 billion loan. The crucial point he makes is that “Because this is a loan, it has no impact on our borrowing – it is a financial asset that will be repaid.” All being well, however all is not well. Institutions like the ECB itself are in trouble, the US Treasury is on credit watch. We may be approaching the financial equivalent of the rapture, when all the reckoning for decades of loose credit will be made. One only has to look at the price of gold to see that people are losing faith in the paper-money financial system.

According to the BBC 350 of us turned out to Rally Against the Debt, a petition passed round gathered 400 signatures so the actual number is likely nearer 500. The Fawkes girls were unimpressed with their first political demonstration and even their father’s speech until they saw a chihuahua dog which made their day. It was as promised, pretty civilised and good natured, there were no riots, arrests or any trouble – apart from 3 counter protestors. The after party at the Westminster Arms went on till late…

The Rally Against Debt will be held at Old Palace Yard in Westminster, central London, at 11 a.m. Today.

Old Palace Yard (pictured above) is in between Westminster Abbey and the Houses of Parliament, a short distance from Victoria train station and walking distance from both Westminster and St James’s Park tube stations.

The Rally will start at 11 a.m. and finish in good time for the FA Cup final, and during that time there will be the opportunity to hear speakers explain why they are rallying against debt, and to see the TPA Debt Clock – a giant digital display counting up the country’s national debt.

If you need a reminder of the reasons behind the rally, why not take a look at our Why Rally Against Debt fact sheet, or check out the official website FAQ. And if you’re on Facebook, why not join the official event page?

Come and enjoy yourselves, while taking the opportunity to make a serious point about the importance of dealing with Britain’s horrific national debt.

Guido has penned  today’s Thunderer column for the Times  behind the paywall. Before people moan, it is for a good cause, tomorrow’s planned Rally Against Debt and for those of you without a log in, he will push the limits of the fair use rules.

…Government borrowing is merely deferred taxation, so this generation is passing on a terrible inheritance of indebtedness that will burden my children, and my children’s children, with higher taxes. The Chancellor will protest that he is cutting the deficit, that he is overspending less, that political reality will not allow him to do more.

This is simply not good enough. Under Mr Osborne’s plans, the Government will still spend more cash every single year. Debt interest payments are set to double and will eventually cost more than the education budget. That is a stupendous waste of money that could be spent educating our children instead of servicing the bloated debts to the bond markets. Cutting the deficit is not enough: cutting the debt is required.

We don’t have big public sector unions organising coaches to London, and no political party is backing us, so we certainly don’t expect the Rally Against the Debt to number in the hundreds of thousands. I am taking my children with me on their very first demo and my first since back in Berlin 1989, to demand on their behalf: “Mr Osborne, tear down this debt.”

See you tomorrow, 11.00 a.m., Westminster.