By Paul Goodman
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Conservatives don't always agree about raising new wealth and property taxes, but tend to do so about cutting the rate at which public spending is rising further. I warned last week of the danger that tax cuts on businesses and employment in the budget may be financed by new wealth and property taxes alone – and of a budget backlash from natural Conservative voters in the event of it proposing:
- The untapered removal of child benefit.
- The end of the 40p relief on pension contributions.
- A new council tax band on properties worth £500,000 or more.
The budget isn't due for another fortnight but that backlash is already under way.
- Pow! Today's Daily Mail leader condemns the mansion tax as "vindictive and unworkable".
- Wham! Benedict Brogan, the Daily Telegraph's Deputy Editor, says that a mansion tax is seen by Conservative Cabinet Ministers as "an assault on the party’s south-east heartlands" – even if proposed in a package that cuts or ends the 50p rate. Eric Pickles has made no secret of his opposition to a mansion tax.
- Zap! Ian Birrell, a former speechwriter to David Cameron, has a piece in the Financial Times (£) headed "Forget mansions and lower the 40p band".
- Ooof! Alice Thomson in the Times (£) comes out for what she presents as a wealth tax – namely, scrapping subsidies for wind farms rather than introducing a mansion tax.
- Kapow! In the Daily Express, Patrick O'Flynn declares that "the child benefit cut was a nonsense from the start".
On ConservativeHome Jill Kirby writes today on the same matter while Tim Knox of the Centre for Policy Studies contributed earlier this week about the think-tank's new publication opposing a mansion tax. Stephan Shakespeare wrote powerfully recently of the danger of the whole tax-and-spend debate shifting left.
So why is what the Mail or Telegraph might describe as the great middle-class fightback starting now? I think there are three reasons:
- The Telegraph and Mail are defending their readers. Their sales are strong in the south. It's their readers who will be hit by the proposed child benefit cull – which is why the first two in particular made such a fuss when it was first announced – a squeeze on tax relief for pensions at the higher rate, and a mansion tax or new council tax bands. The Sun is not greatly exercised about all this, for obvious reasons.
- Let's have a look at who such budget changes would hit. Who pays tax at the 40p rate, but may not pay at the 50p rate? Who among those taxpayers has children and receives child benefit? Who may get the 40p rate tax relief while saving for a pension? Who live in London properties that might be caught by a mansion tax or new council tax band? The answer of course is rather a lot of people, but among them a certain profession is well-represented. Yes, you've guessed it! Political journalists, that's who! Such as – well, let's just say that it's worth having another look at some of those names above and (in the interest of full disclosure) mine can be added to them. A mansion tax might not have much of an effect in Bolton West, but were George Osborne to pave the way for one in the budget the complaints would flow from the ladies and gentlemen of the lobby as relentlessly as time's ever-rolling stream. Another politician has picked this up. He is also a journalist – and an outstanding one. His name is Boris Johnson.
- This speculation is driven by the way this Government works. Nick Clegg and Ken Clarke and Vince Cable (whose correspondence seems to have a knack of finding its way into the media) have all pitched in this week over child benefit or the 50p rate or both. And because so much of the Coalition's business is now subject to public negotiation between the Quad in particular and its two component parts in general, the media can join in – even more than is usually the case. The danger for the Chancellor is that the budget risks looking of control, and the danger for voters is that it actually turns out to be.
No wonder Brogan writes that "the Treasury worries that speculation about tax, driven in large part by the Lib Dems, has got out of hand". But the Chancellor has an alternative simply to financing tax cuts by other tax rises – namely, further to scale back that rise in spending.
Osborne could do a lot worse than read what Andrew Haldenby and Ruth Porter proposed on this site this week in our series on how such cuts might be made – and have a look too at today's savings suggestions from Chris Nicholson of Centre Forum. There is more to come tomorrow and on Friday.