| New Labour would have listened to the ASI |
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| Written by Tom Bowman |
| Wednesday, 26 November 2008 06:03 |
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With the dust beginning to settle after the pre-budget report – and not in a pattern that the government will like (see below) – it is interesting to note the question James Forsyth poses over on the Spectator's CoffeeHouse blog: what would a New Labour budget have looked like? Needless to say, this is based on the assumption that yesterday's PBR did in fact signal the death of New Labour, as this Times leader brilliantly argues. It's not a bad assumption. It struck me as a resolutely Old Labour budget – the kind Dennis Healey could have been proud of. No more prudence, no more golden rules, no more acknowledgement that wealth creation is a necessary condition for 'social justice', rather than it's sworn enemy. Let's just spend and borrow to our heart's content, because someone else will be picking up the bill. Anyway, James thinks he know what New Labour would have done: New Labour might have lifted people out of income tax altogether — helping the poor but also sending out a low-tax message... And they would have done this, he conjectures, by raising the personal allowance. Well, that's just what we suggested the Chancellor do in our brieifing paper Why Alistair Darling should raise the personal allowance. The paper called for a personal allowance of £12,000 for every UK taxpayer – a move which would take 7 million people out of tax altogether and make the average worker £100 per month better off. James continues: I suspect that this would have worked better both economically and politically. Indeed it would. Are you listening, Mr Darling? Comments (2)
... written by Chris Underhill, November 27, 2008
There are certainly sound reasons why a big increase in personal allowances would help everyone, particularly the lowest paid, who would be lifted out of income tax altogether. But we should beware of Unintended Consequences. One of the problems with the council tax is that those who don't contribute have no reason not to vote for spendthrift politicians who promise them something for nothing. Wouldn't the newly income-tax liberated section of the population take the same view? Witness the general indifference when the government announces that the 'rich' (ie. somebody else) must pay more tax.
Surely it’s better and fairer to get tax rates down across the board (ideally on the basis of a single rate regardless of income), but at the same time ensuring that every wage-earner maintains a vested interest in low taxation. Write comment
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About the ASI
The Adam Smith Institute is the UK's leading innovator of free-market economic and social policies. Politically independent and non-profit, the Institute promotes its ideas through reports, briefings, events, media appearances, and its website and blog. For further information, click here.
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