Sunday, April 20, 2008

 

You'll Have to do Better than that Alistair

I've just watched our Chancellor being interviewed by Andrew Marr and fear his story just won't wash over the 10p tax issue. We all know the abolition of the lowest band was designed to pay for the reduction of 2p off the standard rate- part of Brown's surprise slieght of hand 'gift' shortly after coming to power. It has taken 10 months of dawning realisation for Labour MPs to register that this measure will be at the expense of 5 million of Britain's poorest earners.

Polly Toynbee got to the nub of it when she argues Labour's taxation policy has overall helped 'the rich to get richer':

Labour has sold a sackload of the state's family silver in tax cuts. It is easy to make an income-tax cut, but politically too expensive for any future government to restore. Basic income tax has been cut from 23% to 20%, corporation tax from 33% to 28%, and capital gains tax from 40% to 18% (a bonanza for second-home and buy-to-let owners); inheritance tax (IHT) allowances now give a tax-free £700,000 to the middle-aged children in the best-off families.

Scores of Labour MPs are lining up with the Tories and Lib Dems to support Frank Field's critical amendment to the Finance Bill on the not unreasonable grounds that they did not enter politics to assist the impoverishment of 5 million of the poorest people in the country to whom losing a sum of £30 a year means so much more than it does to the better paid. And people who, incidentally, comprise a foundation stone of Labour's core vote; something which applies not only to the next election but to local lections and voters ihn Crewe who will shortly be choosing a replacement for Gwyneth Dunwoody.

Darling's defence that the losers will be compensated in future budgets and citing Labour's commitment to assisting the lowest paid, won't help in the locals or the
London mayoral election and will be greeted with cynicism by most I'd wager. On the broader political front, Labour MPs, as Andrew Rawnsley argues, should not resort to ideas that changing leader provides an escape route. It's too late to do that; there are no electable alternatives; and such ideas always lead to disappointment, just as hopes that Brown would turn around the damage inflicted by Tony Blair, have turned to ashes. My suspicion is however, that despite the government's brave words about no surrender on the 10p, a package of palliatives for the poor will somehow be discovered before that crucial vote on the Field amendment.

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