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« Editorial: David Cameron on the back foot on tax | Main | Another YouGov survey boosts David Cameron »

Comments

Editor

Buxtehude has asked exactly the right questions.

Everyone who keeps saying that tax cuts are less affordable in bad economic times is a prisoner of the Labour consensus; a consensus which conditions us to understand the tax debate through the distorting lens of short-term budgetary questions.

The great prize is to portray tax as a weapon of economic competitiveness. Bush cut taxes during the American post 9/11 recession and jump-started his (and our) economy as a result.

Lower tax economies are successful economies... successful economies create jobs and wealth... wealth pays for good public services... good public education and infrastructure helps sustain an independent citizenry which needs less government help... less government help allows us to afford lower taxes again...

You get the idea...

Here endeth the lesson!

Henry Cook

""Direction agreed upon (share proceeds of growth, lower tax economy)"
Henry Cook, please do make an effort, because I'm sure your heart is in the right place. No, that is not an agreement. Sharing the proceeds of growth with a tax cut is very very different from having a tax cut to get growth. Please tell me you understand that."

No actually, you are wrong. Mr. Davis is proposing to carry on increasing spending on public services, but at a slower rate than the overall growth of the economy. The rest of the money is going onto tax cuts - this is sharing the proceeds of growth between more spending and lower taxes. Read it for yourself - 1% of economic growth according to this plan is to be spent on the public services, the other 1.5% is to be spent on tax cuts. I repeat, this is sharing the proceeds of growth between more spending and cutting taxes.

Mr. Davis is starting from the assumption that there will be a growth rate of 2.5% - this will be shared. Obviously, he also hopes to increase growth as well. However, the plan he has put forward is exactly in line with David Cameron's policy direction. The difference between the two is that Davis seems to have some special knowledge about what the economy will be doing in 2014. Cameron indicates the direction, but doesn't bind himself to irrational promises.

Henry Cook

But Editor, America has a much stronger infrastructure than ours, and a completely different attitude to public services. A strong economy also needs a strong infrastructure, something we are lacking. In addition, I would say what is the point in having a stronger economy, if you have a weaker society? Society is the end, economy the means. We must make Britain a better place to be, and that may well mean continuing investment into schools and hospitals.

Did Davis himself not say that in difficult times for the economy the two ways to get out of it are either to borrow more or to tax more? He went on to say that this was his major criticism of Brown - that he was borrowing excessively when times are good, meaning this would not be possible when times are bad.

Cllr Iain Lindley

Editor, the net result of Bush's tax cuts and spending increases has been record US budget deficits ($412 billion in 2004). Future generations are going to have to pay heavily for such fiscal irresponsibility. Davis's plan (thankfully) bears little comparison with the Bush method.

In any case, we have been down this road before and we have been unable to sell the goods. If Hague and Howard were unable to sell the message then how will Davis's lacklustre speaking and unassured presence manage it?

I can't believe anyone in the Party actually thinks that Cameron is going to set out to increase spending and put up taxes. That's arrant (and in some quarters mischievous) nonsense. What DC does possess, however, is the ability to sell the lower-taxes message in a way which we have failed to do since 1997 - that is why he has my support and my vote.

buxtehude

HC, I am not wrong: DD is promising lower taxes as a plan from day 1 - not later as a divident for having paid high taxes! There's no way around that.

Mr Editor, not just because you agree with me on this, but it must be said: you have hit the nail on the head in a way that the rest of us haven't: it's about accepting or not accepting the NewLabour/Guardian/BBC consensus. Do we want to succeed WITHIN that consensus, accepting Conservatism as a lost cause, or do we want to challenge it?

Remember Giuliani. Before Rudi, all New Yorkers accepted that a downward spiral was inevitable, it was a question of whether it could be slowed. He didn't accept it, and turned things around.

I don't want to give up that fight, just so that a few politicos can smile on the steps of Number 10. (Especially as I think they'll lose by that cowardly strategy anyway).

Editor

Henry: you do not answer buxtehude's central question: do you believe that we need to cut taxes now - in order to boost the economy - or not? If you fail to answer the question one more time we can only conclude that you have a great career in politics ahead of you.

Iain: you ignore the point I have made several times on this blog. America's budgetary problems are a problem of spending splurges - not tax cuts. You do not improve your argument by lumping tax and spending together. Both you and Henry are doing Labour's work. You are Gordon Brown's ideological accomplices. Every argument you make implicitly suggests that taxes are solely budgetary tools rather than instruments of competitiveness. Very depressing.

Henry Cook

"If you fail to answer the question one more time we can only conclude that you have a great career in politics ahead of you." How kind!

"You are Gordon Brown's ideological accomplices." Now I seriously object to that.

Editor, I think that your position is actually different to that of Davis. I do think we should cut taxes now - but this will not decrease the tax take, because it takes an awful lot of tax cuts to decrease the tax take. I think we should cut tax in certain places, but we should not at this moment in time decrease the tax take. Mr Davis is proposing to implement tax cuts as well as increasing public spending - do you not accept that this is his proposal? He is also proposing to increase the tax take, while cutting some taxes. I can't be any clearer on this - he has said himself that public spending will increase at 1% year on year.

"Every argument you make implicitly suggests that taxes are solely budgetary tools rather than instruments of competitiveness. Very depressing."
I'm afraid I don't quite understand the point here. Tax is a necessary evil which is needed to improve the society around us. Am I wrong there? Tax provides us with the money to protect the nation, provide services etc. But I don't think competitiveness is the be all and end all. I would rather live in an uncompetitive but happy society than a competitive and miserable society - would you not have the same preference?

At the end of the day, its all a question of balance. I think Davis and Cameron are suggesting a similar balance but only Davis has looked into his personal crystal ball and come up with plans for 10 years time.

Editor

I'm enjoying my last bottle of Chablis imported from a recent booze cruise - that may explain why I don't understand your first big paragraph. But if you're saying we should cut taxes now... excellent. But Davis' tax cuts + increased spending is internally consistent and consisent with what I'm proposing. I also think you can increase the tax take if you cut certain taxes. I've never opposed increased public spending.

And as for "I would rather live in an uncompetitive but happy society than a competitive and miserable society." Who could disagree? The likeliest outcome, however, is an uncompetitive and unhappy society. That society is one where taxes have reduced the British economy to an also-ran in the world economy league. The economy and jobs growth are flat. Unemployment and its costs are too high and the Exchequer can't afford investment in essential services. I don't often quote Edward Heath but I will tonight:

"The alternative to expansion is not, as some occasionally seem to suppose, an England of quiet market towns linked only by steam trains puffing slowly and peacefully through green meadows. The alternative is slums, dangerous roads, old factories, cramped schools, stunted lives.”

The Conservative Party must again become the party of economic growth.

Growth, growth, growth, growth, growth, growth, growth...

The right kind of tax cuts will help us achieve growth.

Now then, where did I put my wine glass?

Henry Cook

Then I think we largely agree, as do Messrs Cameron and Davis. I must apologise, I am sure I was not as lucid as I might have been. I'll try to do better!

Yes we should cut taxes, but we should not cut them so much that spending decreases. Mr Davis has put into policy detail what Mr Cameron has proposed in general terms - to share the proceeds of growth between lower taxes and more spending. The distribution Mr Davis has come up with is 1% of growth to go on spending, 1.5% to go on taxes. Mr Cameron's opinion, shared by myself, is that it is not sensible to give these figures and other numbers of "£38 billion" or "£1,200" since we do not know what the economic situation will be in 2009 let alone 2014. There is far less difference here than it may appear. The difference is about the wisdom of promising detail now, not about the general policy direction.

Editor

Henry: we've almost got there, methinks.

You and I aren't far apart.

But, more importantly, how far apart are DD and DC?

I KNOW that DD will cut taxes to boost growth.... As the guy from the IFS made clear - we don't really know what DC will do.

DC's formulation could produce the same kind of policy as DD. It cld be reasonably close to Gordon Brown's position. It could be more adventurous than DD. None of us can know. I'd be happier to take a punt on DC if he had a reasonable track record.

The main things we know about him (from recent years) are...

1. He had a fortunate upbringing, went to Eton but has tasted much more of life's difficulties in recent years - not least through his disabled, much-loved son.
2. He signed up to liberal drugs policies when he was on the Home Affairs Select Cttee.
3. He was a loyal servant of Michael Howard and wrote the very thin manifesto upon which we fought the last manifesto.
4. He's an excellent public speaker.
5. He's got a heart for the poor and is determined to put social justice at the heart of Conservatism.
6. He supported the Iraq war.
7. He wants to take Tory MEPs out of the EPP
8. He's run a much, much better campaign than DD and has top minds (like Gove and Osborne) around him - plus members of the controversial Notting Hill set.
9. He believes in a version of the And Theory Of Conservatism.
10. And, of course, he wants to share the proceeeds of growth.

Is this enough? I'm genuinely not sure of the answer to that question.

Jaz

Accept this. Public + Tax Cut = Public Spending/NHS/Education Cuts = Losing 4th Election.

DC might be a risk, but frankly, there's a greater chance that DC will pull it off and get closer to winning an election than David Davis. DD might be promising cutting taxes to stimulate growth... But hell... He can promise plenty...He's still no closer to winning the election.

DD has pulled the typical trick, promised tax cuts to the conservative electorate is a desperate attempt to become leader.

I frankly cannot see why after 3 successive, appalling election defeats the conservative party use the same policy of "tax cuts" which has failed 3 times! We can't afford to have another mediocre right-wing leader who the media have already branded an almost loser. Labour will always win over the conservatives if they propose yet another tax cut idea... Tax reform..sure that might work..but cut..No..

This is what I know, as a normal conservative voter;
1) DC seems more appealing to women and the young.
2) DC hit a chord with the media.
3) DC promises less regulations.
4) DC says that education is important.
5) DC understands that public services are an important part of this nation.
6) DC understands that people will pay more tax for better services.
7) DC despite being from a wealth background has experience with drugs and disabilities.

^The principals sound right...the policies can come later..

Editor

1-6 of your list could equally apply to Tony Blair. These are all sweeping generalities. They may be good enough for you Jaz. I remain unconvinced.

Henry Cook

Editor, I agree, I think we're almost there.

I know Cameron is a risk, but I have no hesitation in taking that risk.

I think it is worthwhile remembering that these two men are contending to be leader of a party, not to be a nomination for President. Neither candidate will be able to command the support of the MPs if they promote 'un-Conservative' ideas - an example would be raising taxes. The new leader must present a programme which is acceptable to the coalition that is the Conservative Party.

The new leader will have a new Shadow Cabinet - most likely containing 'all the talents'. These men will come up with their own ideas and arguments and the new leader must listen to them or they (the leader) will fail.

I sense the beginning of a new togetherness, a new consensus in the Conservative Party. The leader will of course have to lead this consensus, but he will not be able to take it anywhere he might like.

My point in brief (as it has been thoroughly convoluted thus far) is that should Cameron become leader, he could not pursue anything other than a Conservative programme, because he will be leader of the Conservative party.

In my opinion, he has shown himself to be a true Conservative in everything he has said up until now. Others are far from convinced, but I'm sure most of them will be in four years time.

paul d s

"1-6 of your list could equally apply to Tony Blair."

And Blair has won three elections...? Is that the sound of a penny dropping that I hear?

Win with Cameron or be Pure in Opposition?

Tim don't turn into the Tory answer to Tony Benn in the 21st Century.

You are smarter than that, Cameron is no Blair, but he has learnt from Blair, just as he learnt from Thatcher.

BNC Man

How errrrrrrrrrrrrrrrrrrrrrrrr can a man who errrrrrrrrrrrrrrrrrrrrrrrrrrrr cannot string more than a couple of words errrrrrrrrrrrrrrrrrr together be taken seriously as a party leader? This is such a major defect. It's like having David Blunkett doing intricate brain surgery.

Even yesterday when DD was on good ground he could not string more than a couple of words together.

buxtehude

Paul d s wrote: "Blair has won three elections...? Is that the sound of a penny dropping that I hear?"

I think in this series of comments we have come to 2 clear distinctions, between:

(1a) Those who seem to think - like Paul above - that the primary purpose of one's involvement in politics is to be on the winning side of elections (and what you believe is a luxury add-on), against (1b) those who think politics is about fighting for the kind of country you want, even if the risk is losing

(2a) Those who believe that lower taxes generate growth, that the current tax regime is too high, and therefore advocate tax cuts on principle, against (2b) those who think tax cuts are 'nice-to-have-when-we-can-afford-them' - which in my view means never, because people will always find new things to spend on.

On (1), some would argue 'there's no point in holding on to beliefs if you never win power to promote them'. But the bits of political history we can be proud of are where people held unpopular beliefs which they eventually made popular by force of argument, energy, vision. Wilberforce and Churchill come to mind. Anyway, even when you lose, you might be forcing the other side to move in your direction. But cynicism always ends in failure. Would you like to be Peter Mandelson? Several moments of glory and a 'big job' in Europe, and yet universally regarded as the meanest of creatures? To me, Mandelson is someone for whom 'the penny dropped', and whose victory has turned into the most pathetic failure.

On (2), I think if we don't change our attitudes on public spending, we will end up like Germany, deeply demoralised because it pursued a popular fantasy of the 'nice, comfortable society', and ends up with a greate swathe of highly talented young people unable to get jobs. Please remember that there are serious consequences to pandering to unthinking thirst for public spending. It just doesn't work. I don't even think it will win the next election, actually.

buxtehude

Vile comment, BNC Man: "It's like having David Blunkett doing intricate brain surgery." But it seems you can't string intelligent words together. 'Intricate' is redundant in your sneer, don't you think?

Graham D'Amiral

It is quite reasonable to say we have an aspiration to deliver tax cuts, but it strikes me as unwise to say now four years from a general election how much we would cut them by. We can not possibly know what the state of the economy would be by then and as a result guessing what our spending priorities would be is a dangerous game to play.

It would also be poor political tactics, everytime over the next few years we demanded the government spend more on anything, Labour's answer would be an obvious one "but how are you going to afford your £38 Million tax cut, if you want us to spend more". In other words we will have yet another election campaign fought between Labour's investment in public services and our tax cuts, the result of the last two elections would suggest this might not be in our interests.

My own view is that before we even begin to talk about tax we have to establish trust in our ideas to improve public services, only when we are seen to have the best ideas to improve our schools and hospitals, modernise our transport network , increase police numbers and build more prisons can we even begin to address the delivery of affordable tax cuts.

BNC Man

Buxtehude. For vileness why not check what DD's thugs did to get MPs to go public for their man? Maybe you are one of those thugs?

You do not answer my central point that Davis is a poor communicator. If he was as articulate and engaging as the opposition he might get my support. He isn't.

Watching the video of the famous speech the only conclusion you can come to is that he would get crucified in a General Election.

Jack Stone

These deperate tax cutting proposals by DD do him and the party no good at all.
They make him seem desperate and the party as if its still obsessed by tax cuts.
Its a pity that Mr Davis, like Mr Cameron started to put his mind to how we as a party can get into power rather than how he can get his hands on the leadership.

Jack Stone

These deperate tax cutting proposals by DD do him and the party no good at all.
They make him seem desperate and the party as if its still obsessed by tax cuts.
Its a pity that Mr Davis, like Mr Cameron started to put his mind to how we as a party can get into power rather than how he can get his hands on the leadership.

buxtehude

BNC Man - do you admit it was a vile comment? I don't have any responsibility for the comments of DD's team, but you have for your own.

I don't think DD is a great communicator - I agree with you on that. But neither are many effective politicians. It's not the onyl criteria, though I agree it's important.

Wat Tyler

I've just picked my way through this all-nighter, and thought it would be worth posting a couple of facts to correct some of the more exaggerated arm waving.

First, Davis has not "made up" his numbers. They come from applying his "Growth Rule"- which itself calls not for 1%pa absolute spending growth, but 1%pa LESS than trend GDP growth. So on the basis of 2.5%pa trend GDP growth, we get 1.5%pa spending growth.

Second, while of course we do not know exactly what will be happening to the economy in four- still less nine- years time, Davis bases his calculations on HM Treasury's most recent Budget forecasts. These include long-term fiscal projections out to 2034-35. The reason is for that is that all of our experience tells us that governments should make fiscal decisions on a medium to longterm basis, not according to the popular exigencies of the moment (PPE graduate DC perhaps needs to refresh his knowledge of current economic thinking).

Third, DD's calculations take no credit for the expected impact of tax cuts on longterm growth. And that's important because experience tells us lower tax rates mean faster trend growth, means more tax revenue, means further scope for lower tax rates (AND more public spending). A virtuous growth circle which is the exact opposite of Brown's vicious one.

So far from overstating the likely scope for tax cuts, Davis may be understating it.

And finally, to those who say we failed with to win votes with tax cuts in 2001 and 2005, I say what tax cuts? £8bn in 2001, and a truly pathetic £4bn in 2005- that's the equivalent of a weekly packet of Rolos.

Ladies and gents, an end to timidity. Please.

AnotherNick

One simple question Mr editor, do you seriously see David Davis as a Prime Minister of this country?

Forget any detail just for a second & accept that Cameron will not be certain to be PM. But to everyone who doubts David Cameron, ask yourself the above question. If you want a centre-right government, there is only one sensible vote.

Wat Tyler

AnotherNick, while Ed's thinking about it, let me answer yes. I know enough about him and his beliefs to think he'd do a good job.

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