By Paul Goodman
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Tim floats in today's Times (£) a tax break for married couples, reductions in corporation tax, national insurance and the end of the 50p tax band…
…Funded in part by higher wealth taxes. His piece (summarised here for those without a Times subscription) refers to Nick Boles's proposed land tax, a mansion tax, an end to tax relief on pensions contributions at the 40p rate, and new council tax bands for more expensive properties.
Most Conservatives accept that one tax must sometimes rise if another is to be cut. Tim cites the example of the first Thatcher Government's higher-VAT-for-lower-standard-income-tax-rate swap.
But there is a big political danger for the Conservatives in all this.
Namely, that the budget will implement this rebalancing – and therefore some of these proposed rises – without simultaneously carrying out the other half of Tim's prescription.
I cited yesterday on this site some of the big spending decisions that government will have to make sooner rather than later if it wants seriously to cut the rate of public spending. Liam Fox urged spending cuts earlier this week. As does Tim in his piece this morning.
Imagine if the budget does the following –
- Confirms the removal of child benefit from higher rate taxpayers.
- Ends the 40p relief on pension contributions.
- Introduces a new council tax band on properties worth £500,000 or more.
– And consider the reaction from the Conservative Party's natural supporters, bearing in mind the trouble the child benefit proposal is already running in to on the Tory backbenches.
I don't believe that Osborne will introduce those three measures in such a crude form. But I doubt if it would be politically possible for him to do so anyway.
I repeat: we need to think less about raising tax and more about cutting spending.