Trends in tax


The obvious trend in tax is, of course, that it tends to keep going up. That's why Tax Freedom Day, which came on 26 May in 2002, didn't arrive until 2 June this year. However, there are a couple of other trends in the tax policy debate which are worth mentioning.

The first is that tax cuts are – at last – back on the agenda. It started with George Osborne's wildly popular inheritance tax announcement (only millionaires will have to pay death taxes under the Tories!) and has picked up steam since then. Now the Lib Dems have got in on the act too. Leader Nick Clegg says he has found £20bn of public spending to cut, and is now developing "the most radical package of tax-cutting measures for people on middle incomes".

Good. I don’t pretend that any of the main political parties has, or is likely to, come up with a tax-cutting plan that's sufficiently radical for my tastes, but at least things are moving in the right direction. The tax-and-spend consensus is fast unravelling. R.I.P.

The other trend is the rise of the local income tax – a potential replacement for the widely despised council tax (which is levied on property values rather than ability to pay). The Lib Dems have been calling for it for years, the government's Lyons Review endorsed it, the SNP is trying to push it through in Scotland, and now Michael Portillo has declared his support. Local government finance is a dangerous issue – just ask Mrs T – but this is definitely one to watch.