"It sends out a signal to people who create wealth, people who are energetic... can generate new industries or drive large enterprises of one kind or another... that we want to take more of their proceeds away than before. It is a deterrent to enterprise."
That was the Mayor of London on last night's Any Questions? programme on BBC Radio 4. George Osborne has said Labour's tax rise will be "difficult to avoid".
Mr Johnson said that "clobbering the rich" would stifle the City's potential.
On this morning's Today Programme George Osborne confirmed that it is likely that he'll keep Labour's plan to introduce a 45p tax rate for those earning over £150,000 in 2011.
You can listen to the entire interview on the BBC website.
(This ToryDiary has been altered since going live at 9am to take account of Boris Johnson's intervention).
It hasn't. He said it would be difficult to avoid.Bit of a difference don't you think.
Posted by: Malcolm Dunn | March 21, 2009 at 09:19
"Difficult to avoid" doesn't mean "need to accept"... it means the finances are in a state and only a fool would rule out options at this stage, given the appalling mess Labour have got us into.
Posted by: StevenAdams | March 21, 2009 at 09:23
For once George Osborne is right. If taxes are to be increased they must be targeted at those who can most afford them and this measure does just that. He now needs to go on and actually tell people what cuts in public spending he wants to see.
Posted by: Jack Stone | March 21, 2009 at 09:26
I have just cancelled my £50 per month direct debit to the Conservative Patrons Central Office fund in order to help pay for the 5% increase in tax I will have to pay when the Conservatives get into power. The whole thing is outrageous. How dare DC say that the greed of people earning more than £150k p.a. are to blame for the mess we are in? The reason we are in this mess is becuase of Brown's low interest rates, high taxes and massisve public spending. The burden of state debt is the biggest threat to our national security. It has to be reduced and that means slashing public spending. I don't want to hear stupid soundbites like how the Tories are going to freeze the BBC licence fee. I want to hear they are going to scrap it! And for the Conservatives to refuse to acknowledge that public spending is our biggest enemey and not the lack of tax, well...I give up!
If the Government were clever - and they are - they would now call a Commons debate on a Government motion in Government time on tax. They would put a motion that the top tax rate should be 45% for high earners and wait to see how the Tories voted. The result: havoc on both Tory front and back benches. By God, Mandy would have fun with this one!
Posted by: Dog Biter | March 21, 2009 at 09:30
Indeed, throughout ConHome's coverage if this comment from a webcast, the inference has been that GO said "we capitulate, we accept it is a 'must-do'... no, a 'should-do'"... whereas he said it was a "difficult to avoid".
The difference between the two is massive... and I wish that the editors would recognise this. I love this site and usually don't take issue with the editorial approach, however the near-hyperbole that has been gushing forth in the past 24 hours doesn't reflect GO's comments and is now, predictably, being used to beat DC with by the broadsheets.
I'd be very angry if that pressure led the party leadership to rule out what may be an undesirable but necessary short term measure to bring stability to the public finances.
Posted by: StevenAdams | March 21, 2009 at 09:31
So, according to George, whichever party wins the next General Election, taxes will, most likely, have to be increased substantially, with those earning a bit more and who are the ones who usually make the greatest contribution to the nation's economic advance being clobbered most for the failings of the banks and the FSA.
Sound like national finances are in even worse state than we are led to believe and that George is trying to avoid the Conservative Party winning the election and having to face the prospect of having to run the country through years of austerity.
Lifeboats! But to where can economic refugees from here go?
Posted by: Sam R | March 21, 2009 at 09:42
Of course an tax increases should primarily be targeted at those who can most afford to pay. It's no good those on a lifestyle of second homes, glitsy London restaurants and transatlantic jollies looking out for their own narrow interests in all of this.
In the real world, why should people on much more modest incomes have to fork out in the first instance, either through higher taxes or massive cuts in the public services they rely on much more than the wealthy? It's a question of social justice.
Posted by: SW | March 21, 2009 at 09:43
"Sound like national finances are in even worse state than we are led to believe and that George is trying to avoid the Conservative Party winning the election"
I think you could be bang on right on this one, Sam.
Posted by: Dog Biter | March 21, 2009 at 09:44
The public finances are in a terrible state. We will have to fix that (again). Both Cameron and Osborne have said that they want taxes to be lower and they expect them to be lower at the end of our first term. However, in the short term taxes may well have to go up to fund Labour's profligacy, in exactly the same way that Margaret Thatcher put taxes up initially (and was famously attacked by 360 economists for raising taxes in a recession).
Like Cameron, Osborne and many contributors to this site, my instinct is to lower taxes. However, we must be realistic. Yes, we can and should cut government spending but that takes time. Even cancelling programmes such as ID cards has a cost as the various companies working on the project have to be compensated. Labour has run a deficit for far too long. Sadly, we are all going to have to pay for that.
As Steven Adams says, "difficult to avoid" is not the same as "need to accept". We haven't suddenly become a tax and spend party. We remain a party committed to a small state. But we are first and foremost a party of sound public finances. And, given the size of the public sector deficit, I think our leadership are quite right to say that taxes will probably have to go up before they can come down. Labour has placed a tax bombshell timed to damage the recovery. By the time of the election it may well be too late to prevent that bombshell exploding.
Our priority MUST be to kick Labour out at the next election. If we don't, Gordon will continue to spend like there is no tomorrow and we will all pay.
Posted by: Peter Harrison | March 21, 2009 at 10:05
How come he hasn't said 'spending cuts will be difficult to avoid'?
Posted by: Tommy | March 21, 2009 at 10:19
"We remain a party committed to a small state."
No we don't. We reamin a party commited to a 'not bigger' state. The size of the state is huge and we will do nothing to shrink it.
If he had said public spending has to be slashed and taxes will have to rocket, there would not be a problem. What he actually says is that spending will stay at unsustainable levels and that the wealth creating people are gonna be the ones who pay.
Posted by: Tommy | March 21, 2009 at 10:28
George Osborne is too easily deflected from the central issues.
A 45% tax rate would raise £3 billion pa at most. So it's two orders of magnitude greater than Fred Goodwin's pension fund, but still two orders of magnitude smaller than the hundreds of billions taxpayers may have to fork out as a result of Darling's "Asset Protection Scheme".
Similarly the government is now so afraid that it won't be able to borrow as much as it needs/wants that it has set the Bank of England to buy up gilts, rigging the market. That could run up to £100 billion just on the letter of authorisation Darling sent to King, and there's nothing to stop him sending another such letter .
In fact just in the last ten days the Bank has spent £7 billion of newly created money buying gilts, while in parallel the Treasury has borrowed a comparable amount by selling new gilts, and that's two or three times the annual revenue which would be raised by through a 45% tax rate.
Posted by: Denis Cooper | March 21, 2009 at 10:33
Sigh.
I saw on the last thread someone said VAT should be increased instead so people have a chance to avoid it through careful spending.
Nonsense. VAT is not avoidable, people need clothes, shoes and many other things. VAT is a tax on the poor.
The fact is Labour have ruined the country.
Spending cuts are no long enough. More tax revenue is needed. 5% extra over £150k is hardly unreasonable. It's not as if there are that many people left earning that much any more anyway.
I cannot see a more reasonable source of revenue.
Remember this is not 'Tories want to increse tax and spending', but 'Labour have ruined Britain, and we need to repair the damage'.
Times have changed dramatically in the last 12 months.
Posted by: matthew | March 21, 2009 at 10:38
I'm still reeling from 2 years of Cameron and Osborne matching Labour's spending. Then there was the knee jerk 'let's all bash a banker today'. And now...
Would C and O please show that they at last understand the fundamentals? And we don't want on-the-hoof soundbites.
Otherwise some of us will be calling for Boris to be Chancellor!
Posted by: Lindsay Jenkins | March 21, 2009 at 10:50
Funny that people wanted Osbourne to be "honest" and admit that public spending would have to be cut - but no one wants him to be honest about raising taxes.
So does this mean people with their heads in the sand think taxes don't need to be raised, or simply that they have double-standards.
dogbiter, I feel so sorry for you that you can't afford £50 a month despite earning over £150,000 a year. How did your finances become so tight - gold-digger ex-wife's maintenance, buying luxurious property at the top of the market and now you're in negative equity?
Boo-hoo, I feel so sorry for you earning a mere fraction of what you do and not even owning my own property.
Posted by: Raj | March 21, 2009 at 11:00
Otherwise some of us will be calling for Boris to be Chancellor!
And some of us will say "not on your life!"
Posted by: Raj | March 21, 2009 at 11:05
George Osborne is absolutely right. Borrowing even more money which incurs the extra expense of interest and insurance certainly isn't going to help 'people who create wealth, people who are energetic'.
The other and even more unpalatable option is to raise taxes on low and middle earners instead. The idea of this course of action makes Conservative activists physically sick. It will also adversely effect owners of businesses, because wider tax increases on people will leave them with less money to spend buying goods and services.
Both economically and politically George Osborne is right not to rule out the 45p band.
Posted by: Conand | March 21, 2009 at 11:24
"So does this mean people with their heads in the sand think taxes don't need to be raised, or simply that they have double-standards."
Lets be honest, this was a tax pledge in disguise. There has been no corresponding spending pledge. If he had said 'we will raise tax and cut spending' then that would have been fine. If he had said 'we will raise tax on high earners to 45p and cut university places' that would also have been fine. But to be specific about raising taxes and vague about cutting spending leads me to believe that he only intends to do one of those things.
Posted by: Tommy | March 21, 2009 at 11:30
But to be specific about raising taxes and vague about cutting spending leads me to believe that he only intends to do one of those things.
Let's take a journey to reality central here for a moment.
*Public currently don't like rich people.
*Public currently like spending.
*Easy to indicate taxes go up.
*Hard to indicate spending go down.
Osbourne is in a delicate position. The BBC and other pro-Labour media groups will jump on any comments about reducing spending that aren't vague. He has to move slowly so the public get used to the idea of taxes going up and spending going down.
As the Chinese say, if you want to boil a frog you should turn the heat up slowly.
Posted by: Raj | March 21, 2009 at 11:41
Well we've been saying that the Conservative front bench has to 'level with people' about the recession and the state of the country.
So yes, there is going to be pain and yes, no one who is able to pay a share for Brown's unmitigated disaster is going to come out unscathed and lighter in the wallet. Why shouldn't we start with a 45% tax rate for earnings over £150k? There's enough pain to go round for everyone.
My only complaint is that there should be a way of taxing lefties more. Perhaps a voluntary increase in tax for the luvvies and 'progressives' who beat their chests so hard what a poor deal lower income people have? Surely they'd jump at the chance to pay more tax. This could be a variation on the wartime buy bonds scheme. Any lefty chest beater who doesn't pay gets told in no uncertain terms to shut the **** up.
Oh, and a mandatory 10% tax hike for all members of the Liberal Democrats for having foisted Vince 'I told you so but actually I didn't' Cable upon a weary nation absolutely sick to death of socialism and keynesianism.
Posted by: Old Hack | March 21, 2009 at 11:44
Socialism has won in the UK.
Cameron and Osborne won't fix anything. They are as much part of the problem as New Lab.
Good on Boris. There are many good conservatives waiting in the wings to pick up the pieces when Cameron's 'A'-team makes a mess of things.
Posted by: ToryBlog.com - The Editor says that I must warn you that I have been a naughty boy and not a loyal Tory-abix | March 21, 2009 at 11:47
Unfortunate, Raj, that you take a swipe at me for earning over £150k p.a. I thought us Conservatives were not supposed to be envious or jealous, but were supposed to be thrilled when people doing well, m aking money, getting on in the world.
When Conservatives start saying kick the rich then we are in BIG trouble.
The whole Conservative ethos needs to be sorted out. The party needs to do a major inventory on itself. Quickly. Apeing Labour cannot be the answer. We need tough proposals, from a tough leader. We should be another 10 points ahead in the polls but we are not, so obviously something is going wrong with the party leadership.
Posted by: Dog Biter | March 21, 2009 at 12:00
Raj says we need to go to Reality central and states:
"*Public currently don't like rich people.
*Public currently like spending.
*Easy to indicate taxes go up.
*Hard to indicate spending go down."
I only agree with his first point. Otherwise Raj is out of date.
Opinion polls now say voters think the government is spending too much and they are being taxed too much.
I think that gives you a 25% in-touch and 75% out-of-touch ranking Raj :-)
Posted by: Tim Montgomerie | March 21, 2009 at 12:01
A tax increase of 5% can hardly be described as clobbering the rich ( top income tax rate was was 80 or 90% under Labour a long time ago remember), but Mr. Osborn has painted the Conservatives into a corner with this remark.
Of course taxes are too high, all of them, but massive government spending on the bloated public sector is the main cause and without a promise of drastic action on this nothing will change.
Can`t see it happening under a new Tory (Blue Labour) government.
Posted by: Edward Huxley | March 21, 2009 at 12:01
Another Europe moment for the Tories. They never learn.
Posted by: joshuwahwah | March 21, 2009 at 12:11
"It hasn't. He said it would be difficult to avoid.Bit of a difference don't you think."
Yes, Malcolm @ 09:19 - this is precisely the point I was making over on the other thread!
No one wants tax rises - of that we can be certain but the situation we find ourselves in now is a whole different ball game to anything we have ever experienced! I share Boris's concern that it is a "deterrent to enterprise" but quite frankly it is a bitter-tasting medicine that we may have to swallow quickly in order to cure the patient in the long term...
Posted by: Sally Roberts | March 21, 2009 at 12:12
Grow up everyone. You really think the Tories can go into an election promising to reduce taxes on the rich but nobody else?
Posted by: John | March 21, 2009 at 12:17
John, Who is proposing reducing taxes on the rich or are you knocking down straw men rather than engaging in serious discussion?
Posted by: Supply sider | March 21, 2009 at 12:22
Oh, Sally, just when I thought you had started being sensible.
Ok, hands up, I am going to get hit by this and so part of my objection is a purely selfish one. But what angers me more is that there has been an explosion in the number of economically unproductive jobs in the public sector, together with significant base salary and bonus increases in central and local government and the retention of final salary pensions. You could reduce these massively, as well as cutting other areas of government expenditure without offering this lefty crowd-pleaser.
High earners have far more opportunities to avoid tax. Many will leave the country and so the tax take will be nothing like planned.
Boris is right on this. Kick the financial services sector whilst it's down. Smart move, George.
Posted by: Mark Hudson | March 21, 2009 at 12:23
Labour's 45p tax rate is an "elephant trap."
If we oppose it Labour will say "The Tories only care about the rich."
The BBC, the Guardian et al will keep on repeating it, and before you know where you are, our poll numbers will be going down!
I'm sorry to say that this is not the first time that the right of the party have failed to spot traps that Labour have set for us. That's why I like Cameron, because he spots these traps and avoids them.
Do you remember the "grammars" row? It didn't do the party any good did it? Seem to remember that our poll numbers went down and we only narrowly avoided an election.
The main lesson of all this is that if we wish to win an election, and we now have the best chance of winning that we have had for many years, we've got to learn self discipline again and stop getting hot under the collar when the party does something we don't like.
Quite honestly the "grammars" row got more traction in the public mind than this issue will ever get, despite the support of the Telegraph. It is obvious really, very few people earn over £145,000 per year. Bad timing too when loads of people are losing their jobs and being repossessed or have had their investment income wiped out, or don't know how they are going to pay their gas bill. As they say in the North of England - "Think on't."
Posted by: Freddy | March 21, 2009 at 12:32
Yo Raj
'As the Chinese say, if you want to boil a frog you should turn the heat up slowly.'
Why the chuffing heck would one want to boil a frog?
Lobster, fair enough, but at maximum heat to kill the poor blighter instantly.
Naturally one has Lobster Thermador au Crevettes with a mornay sauce served in a Provencale manner with shallots and aubergines garnished with truffle pate on a daily basis. Liking your class warfare stuff 'eat the rich!'
Will you be doing the knitting whilst I and the other evil capitalists/aristos/home owners get out heads lopped off by Madame Guillotine?
Will you be forming a mob to storm Wandsworth prison or maybe just a little bit of HMS Belfast related Westminster bombarding?
Posted by: Englandism.co.uk | March 21, 2009 at 12:34
You must differentiate between 'tax take' and 'tax rates'.
The tax take (total amount collected) obviously needs to be high enough to cover the outgoings (current and debt) - but how the take is related to tax rates is a different issue.
The tories seem to have fallen into a rut worn by labour - and can't escape it.
I am sure they will be the next government, but I am losing faith in how well they are going to handle it.
Posted by: pp | March 21, 2009 at 12:37
And, you think, Freddy that once we've surrendered on 45p Labour will stop? Of course not. They'll set new traps for us. They'll propose a 50p band and then and then. We'll keep surrendering in order to avoid something politically difficult and Labour will have fundamentally changed the terms of debate about tax and spend.
Posted by: Tim Montgomerie | March 21, 2009 at 12:38
Dog Biter, I have no problem with people earning money. However, when some idiot claims he has to cancel a £50 standing order - which is what some people on modest incomes will give to charity - because of a 5% rise on income over £150,000 I do have a problem with that person's arrogance and selfish behaviour.
If you could not afford £50 a month after this tax increase, you have only yourself to blame for running so ridiculously close to your financial limit and refusing to cut back on something else.
If you have a large cushion in your budget, you can afford £50 a month and should stop bellyaching.
++++
Tim, people think tax rates are too high for them. They don't think the rich can't afford to pay 5% more. I think you're the one that's out of date.
As for spending, it depends what questions you ask. If you ask "is government spending bloated" most will say "yes". If you ask "do you support the Tories' plans to cut front-line services" the answer will be "no". That's why Osbourne should act cautiously.
Posted by: Raj | March 21, 2009 at 12:39
So, Tim, given the inconsistency over the public's attitude towards spending I would say that would give me about a 75% in touch rating, 25% out of touch rating.
As for you, you get a 25% political awareness rating. :D
Posted by: Raj | March 21, 2009 at 12:43
Mark Hudson - I am sorry to have fallen short of your expectations, but I am afraid it is likely that on most things you will not regard me as politically "sensible" and I am afraid we'll have to live with that!
Englandism - I too share your bemusement that anyone would want to boil a frog. It sounds suspiciously like cruelty to one of our European Partners to me *ducks quickly to avoid the hail of rotten cabbages* However, I thought your recipe for Lobster Thermidor sounded delicious - without the truffle pate which is possibly "de trop"!
Posted by: Sally Roberts | March 21, 2009 at 12:45
Tim @ 12:38 - I think you under-estimate our Treasury Team's ability to do costings and be able to estimate when they are being fed a load of B***! After all we have at least one ex-city man in the team in Greg Hands! I can't imagine him allowing himself to be spun a line by Labour!
Posted by: Sally Roberts | March 21, 2009 at 12:49
Mark Hudson. Do you play football for Rotherham United? hehe
Anyway,
Mark you are quite correct in your analysis. I have just read that the Government will debate this in the House Of Commons in the hope that it will rip the Tories apart, which of course it will. By the way has the Grammar school question been answered by Mr. Cameron yet?
Posted by: joshuwahwah | March 21, 2009 at 12:50
I'm unpersuaded Raj although would agree that the public would be supportive of taxes on the rich.
Here's the polling (there's been a lot more since) on why I think you're largely wrong on the changed public mood:
http://conservativehome.blogs.com/torydiary/2008/03/further-proof-t.html
Posted by: Tim Montgomerie | March 21, 2009 at 12:50
Raj:
All of the opinion polls seem to suggest that a huge majority want public spending slashed.
http://www.independent.co.uk/news/uk/politics/voters-revolt-over-taxes-1208488.html
Don't you ever get tired of being wrong on every single issue you ever comment on?
Posted by: Tommy | March 21, 2009 at 12:51
Raj
"Arrogance and selfish behaviour". Come on, being judgemental is not a very sensible way of going about things. I have cancelled my £600 per year to the party Patrons by way of protest. Why should the party get my money if it does not appear to be the party I have always campaigned and voted for? If anything, I will now give more on a local level where my MP is resolutely Conservative and has similar views to me when it comes to tax. But I am not giving my money direct to Central Office if they are going to come up with sort of neo-New Labour tax claptrap.
Raj, I don't think you're really much of a Conservative. Thought of joining the Lib Dems?
Posted by: Dog Biter | March 21, 2009 at 12:54
Yes, Old Hack @ 11.44 – brilliant idea – Lefties need to be taxed more – including followers of the ‘cult of Cable’ [dubbed by one FT writer as having “loony”, and contradictory ideas] – and who has instantly reverted to what must be his default position of a nationalising Comrade. [Cable was a Comrade councillor in Glasgow, helped Comrade Brown write ‘The Little Red Book’ advocating the nationalisation of Scottish banks – and now that deadly duo have got their way].
As I have just posted on another thread [about MPs taking a pay cut] – it’s not in the Lefty DNA to lead by example. And it beggars belief these rich Lefties don’t voluntarily “redistribute” their own wealth instead of advocating others do that!
Posted by: Jill, London | March 21, 2009 at 13:01
@Tim
I'm highly honoured that you have noticed my post.
I agree with your logic, but I don't agree with your conclusion because, hopefully, Labour will be out of office by, say May 2010, and hopefully, unlikely to regain office in the forseeable future - after all they have messed up everything they've touched.
Once in office I can't see Cameron upping the 45% tax rate, can you?
The worst outcome would be a big row in the Tory party leading to the loss of the election followed by more of Brown & Co's incompetence, including upping the 45% rate.
Traditional Labour would be overjoyed by that! Don't give them the satisfaction.
Posted by: Freddy | March 21, 2009 at 13:05
I would very much like to know - if Gordon Brown announced today that we were having a general election, and in a few weeks time Cameron became Prime Minster and Osborne became Chancellor, what would they do to mitigate the economic catastrophe facing the country?
I don't mean passing a retroactive law to deprive Goodwin of his pension, or freezing the BBC licence fee, or even deciding whether to have a 45% tax rate.
Those issues all rank between "trivial" and "minor" in economic terms.
What I mean is this: the major banks now have little, or maybe zero, or maybe negative capital - they don't know, because a chunk of their assets can't be properly valued - and therefore they won't or can't lend enough money to the private sector, and therefore the productive parts of the economy of the economy are shutting down, and therefore unemployment is rising sharply and social security payments are soaring while tax revenues are plummeting, and the government budget deficit is exploding, and now it is reaching the point where it can't be funded by further borrowing without the Bank of England being brought in to rig the gilts market.
So what would they do?
It's no good taking refuge in "We can't say until we've seen the true state of the books" - there's enough information publicly available to know that the state of the books will be truly appalling.
Or in "We're not going to reveal our policies now so that Labour can steal them" - we're facing a national crisis, and if the opposition parties think that they have better ideas than the government on how to deal with it, they should announce and explain them very clearly.
Otherwise, they are being just as irresponsible as the government.
Posted by: Denis Cooper | March 21, 2009 at 13:06
'I would very much like to know - if Gordon Brown announced today that we were having a general election, and in a few weeks time Cameron became Prime Minster and Osborne became Chancellor, what would they do to mitigate the economic catastrophe facing the country?'
I asked Eric Pickles this very week that very question. His answer, well he banged on about Labour ruining the economy. He had no answer or indeed the first idea. I have seen people on here today say they would cancel their membership to the Conservative party. Well that is what my good friend Scott did after this 'debate' with Mr. Pickles. Of course Scott still has Conservative values but he was shocked at the lack of preparation and the 'answers' that Mr. Pickles gave.
Posted by: joshuwahwah | March 21, 2009 at 13:15
A pity we can't give Osborne to the Labour party - to all intents and purposes he supports everything they stand for. Apparently still rather immature and personally cushioned as he is to any economic hardship and never having done a proper job in his life he is ideally suited to the stupidities of that party. He should go before he does the Conservative cause any further harm by his left wing tax the rich attitude. Thank goodness for the common sense and excellent logic of Boris Johnson.
Posted by: JS | March 21, 2009 at 13:15
Has anyone noticed the Labour focus on GO's inheritance tax announcement last year... that the Cons are looking to tax cut for the rich etc etc?
The top rate tax hike from Labour was a bear trap... to tempt the Cons to pledge to cut it, so that accusations of elitism could be slung at us.
I still believe DC and GO are small-statists (though not dogmatically), but that they are politically savvy enough to realise that they cannot allow Labour's dogwhistle politics to dominate the next GE campaign.
Posted by: StevenAdams | March 21, 2009 at 13:19
Do the Tories have to rise to every crumb of bait that the government offers?
Just say "That's a relatively minor issue", and immediately move on to present the Tory party's substantive proposals on what should be done to avert the impending economic catastrophe.
Posted by: Denis Cooper | March 21, 2009 at 13:24
@Denis Cooper
You are right it's fish bait and there is a fish hook in the bait!
Posted by: Freddy | March 21, 2009 at 13:44
Denis is right.
This is the question: do Cameron Osborne et al even realise there is an impending economic catastrophe?
After all they only realised the last disaster well after it had happened. Always behind the curve.
Posted by: Lindsay Jenkins | March 21, 2009 at 14:04
I have just written to Gordon Brown asking that he organise a Parliamentary debate on tax with a vote on whether the Government should raise income tax. I can't wait to see Cameron and Ozzie scampering around ordering all those naughty Conservative MPs to get in line. The fact is that for large block of Tory MPs this would be going just too far down the neo-New Labour road. They would be dead set against raising tax to 45% for high earners and would be likely to vote against it. Result: Well-deserved Smack In Face for Cameron. Well, he asked for it, didn't he?
Posted by: Dog Biter | March 21, 2009 at 14:49
Some brief points for all our budding Napoleons wanting to be strategically clever.
(1) THE 45% TAX RATE WILL NOT RAISE ANY MONEY. At best it will catch less than half a million people.
(2) The tax rise is not "hard to avoid". It will be extremely easy to avoid. For example, by means of a salary sacrifice into a pension fund.
(3) The Treasury have probably worked this out for themselves. A little noticed part of the last Pre Budget Report was that they have frozen the Lifetime Allowance and the Annual Allowance for pension funds from 2010/11 - which is when, surprise surprise, the 45% rate applies. They may even be planning to force the top-earners to boost their pension contributions, because the Govmt has an ambitious target to raise savings levels and this would be a sneaky way of satisfying that whilst raising money.
(4) What the Tresury probably don't know at the moment is that there are alternative ways around their little scheme which would take, oh, about an hour-and-a-half to implement.
In summary: the 45% rate is a device to obscure what the Treassury have got planned for basic rate taxpayers in the medium term. If Tim really wanted to ask probing questions he might take up the subject of the future income tax and NI thresholds.
Posted by: William Norton | March 21, 2009 at 14:52
@William Norton 14:52
My understanding is that our frontbench aim to oppose the changes to thresholds but I'll check on that.
Posted by: Tim Montgomerie | March 21, 2009 at 15:15
Will those who are so relaxed about the deficits and are trying to take it off the agenda(must not frighten the horses)explain where the money is to come from to pay for the £450 billion now forecast for 2009/11.
Its got to come from
more taxes or
foreign borrowing or
cutting expenses or
printing money.
Will Mr G Osborne tell us?
The electorate is not stupid and just trying to hide the choices is demeaning and lacking in leadership.
Posted by: anthony.scholefield | March 21, 2009 at 15:31
Britain is in hideous economic difficulties, both short-term and long-term. Sorry if this is obvious to you already, but I'm not sure it is to everybody here. Yes, we have to clear up the mess again. It is not enough to propose scrapping pet Labour projects like ID cards (much of the cost is spent anyway and then there's the inevitable compensation to get out of contracts). Also doing away with the BBC licence fee, though a pleasant thought, does not reduce government debt at all (and means Sky would be on the war path). These are all distractions from the real work.
I'm afraid we'll have to get down and dirty. A prolonged period of cuts or freezes will be necessary, it's going to be a dose of incredibly nasty medicine and will result in a significant restructuring of our economy. Politics is the art of the possible so to get it all through the pain will have to be shared at the top as well. Yes, that means a 45p tax band and perhaps a pay freeze for MPs and other key leadership groups.
Posted by: Adam | March 21, 2009 at 16:46
The 45% proposal has nothing whatsoever to do with raising revenue - the only purpose of this proposal is to cause bother in the Tory party. They have tried similar dodges before. It is an "elephant trap."
Why do you think that Cameron and Osborne aren't being specific about their proposals? Surely the first rule of politics is don't present your opponents with a large stationary target!
If you give Brown's media choir details now they will delight in ripping them to shreds in the period leading up to the election!
Furthermore you'd be surprised how few people can, or want to, deal with details of this sort - why do you think that some tabloids contain so little news? Not everybody, including myself, need, or have, a Bsc Econ or an FCA. But, they have all got votes, just like you!
To convince the public you need to communicate in tabloid style ie:- a few soundbites, followed by a pause, followed by more soundbites and so on. Labour realised this earlier which is why they are in power now.
The awful truth is that in the current media environment all you can really convey is your direction of travel. Most people get their politics from the t.v. On the t.v. news all you'll get time for is a couple of soundbites - it isn't a great deal better at election time!
Well! I am right aren't I!
Posted by: Freddy | March 21, 2009 at 17:03
This is an immoral debate conducted in a vacuum,out of context,and is what happens when a party abandons principle for pragmatism!It actually ends up taking all the the socialist premises of its supposed opponents.Income tax is essentially and fundamentally socialist.People are punished for achieving and being productive.It is egalitarian.Once you accept it you end up having a disgusting and immoral horse trade on percentages and principles are forgotten.I despair!
Posted by: niconoclast | March 21, 2009 at 17:08
@niconoclast
You have absolutely no chance of abolishing income tax. It started off as a temporary tax in the Napoleonic wars, and we still haven't got rid of it.
In a democracy you have to present your policies in an acceptable way and to do this successfully you have to "trim" ie:- water down some of them. I do assure you trimming has been going on for hundreds of years in this country.
Trimming is not immoral it is sensible!
Posted by: Freddy | March 21, 2009 at 17:45
Boris also wants an amnesty for 750,000 illegals during a recession.......still think he's a genius? I'd rather have Osborne in the Treasury than Boris anyday! Boris is ok as Mayor of London, where he has no REAL power!!!
Posted by: Carrie | March 21, 2009 at 17:49
Freddy: It started off as a temporary tax in the Napoleonic wars, and we still haven't got rid of it.
Factually incorrect. Income tax was introduced in 1799, abolished in 1802, reintroduced 1803, abolished 1816, and finally re-introduced in 1842 as a temporary one year expedient. It has been renewed each year since 1842.
Posted by: William Norton | March 21, 2009 at 18:00
I hope Osborne and Cameron are also going to tell the Scots, N Irish and welsh they will have to have severe cuts to their budgets as they've been on a gravy train for the last 12 years. It should not be only the English who feel the pain. If the Tories win the next election it will be thanks to the voters in England and the Tories should bear this in mind.
Posted by: Kelly Mac | March 21, 2009 at 18:00
Excuse my ignorance but wasn't the higher tax rate 60% under Thatcher?? Just throwing out there.................
Posted by: Jonny | March 21, 2009 at 18:04
I hope to God all these so called major cuts that are going to have to be imposed after the next election will apply to MP's salaries and expenses as well because when people are hurting, badly, there will be riots if MP's are seen to be still coining it in. I suggest Cameron does what the Irish have done and make all in the public sector take a 10% pay cut.
Posted by: Stanley, UK | March 21, 2009 at 18:11
@William Norton
Thanks for correcting me! That is really interesting - I am going to remember that for future use.
Is Jonny right about the 60% rate under Maggie?
Posted by: Freddy | March 21, 2009 at 18:26
I listened to Any Questions.Boris was clearly uncomfortable trying to defend the City and got stuffed by the Bishop.
Personally I don't think pledging to cut this tax when we get into office is either morally right in the current climate (in the extremely unlikely event that any tax cuts could be afforded we should start at the bottom) or in any sense politically sane.
Mark Hudson was honest enough to admit that his political viewpoint was determined by his own extreme selfishness.That may be alright for Mark but I don't think the political philosophy of our party should be determined along those lines.
Posted by: Malcolm Dunn | March 21, 2009 at 18:27
@ Freddy
Yes I am right, the top tax rate was reduced to 60% under Thatcher in the early years and was only reduced to 40% by Lawson in the mid to late eighties. George Osborne was asked about it by Krishnan Guru-Murphy on tonights channel 4 news.
Posted by: Jonny | March 21, 2009 at 21:52
joshuwahwah at 13:15
>>'I would very much like to know - if Gordon Brown announced today that we were having a general election, and in a few weeks time Cameron became Prime Minster and Osborne became Chancellor, what would they do to mitigate the economic catastrophe facing the country?'<<
Alhough I'm sure, being a law graduate and all, that you are smart enough to know this, I'll say it anyway.
There are two reasons the Conservative leadership aren't going to answer your questions. (1) Labour are such conniving, slithering folk that we have no desire to give you "ammunition" to twist and spin deceitfully. (2) Until we see just how much worse your idiocy has made things we can't possibly know how bad the giant mess will be and so, consequently, how dramatic a course will be needed to repair it.
You will, of course, continue to suggest that the reason we don't answer is because we don't have answers. You don't really believe that, you just want us to spell it all out so you can find some way to abuse our policies. Keep trying. It's kinda funny to watch.
All this trolling and sniping is pretty pathetic really. As a movement you are now so desperate and craven that instead of heading to your own boards and actually discussing ideas and policies (god forbid you might one day have some), you come here and bleat your nonsense in an attempt to sow division.
I'm all for debate. By all means join in. Share your thoughts. Offer some intelligent input. I have no problem with the genuine left, at least they had integrity even if I didn't agree with them very often. What is left these days are people like you. It's really sad.
Posted by: Steve Tierney | March 22, 2009 at 00:42
Englandism: shouldn't that come with Spam?
Posted by: Dave | March 22, 2009 at 03:52