Labour must call election before 6th April 2010

Following the announcement yesterday that the government will tax anybody earning over £150,000 at a rate of 50%, I have been reviewing their manifesto from 2005. It explicitly states towards the bottom of page 16:

"We will not raise the basic or top rates of income tax in the next Parliament."

There are no caveats or hedging. This is not open to interpretation of what the top rate of income tax means like Labour tried to argue when they abandoned their pledge to hold a referendum on the European Constitution.

If Labour go to the country before 6th April 2010 (when it will come into effect) with this tax change in their manifesto, and they win, then they can have a fresh mandate to make this change. Otherwise this is a blatant reneging on a major plank of their manifesto and there is no reason to ever believe anything else that they put in a future manifesto.

This is a point that the opposition parties should hammer home again and again.

Damp Squib Budget

I was hopefuly today that Alistair Darling's budget would bring some cheer but it has ended up a damp squib.

He could and should have made some changes to put more money in the pockets of ordinary people. An increase in the starting rate for tax would have been a good move, or a reduction in the 20p rate. He could also have reduced corporation tax for small businesses which would help in the current climate.

Instead we seem to have had a few gimmicks. A scheme to encourage people to buy new cars but only if theirs is at least 10 years old. That won't help many people struggling and even those who qualify will have to stump up thousands themselves as well. There are a few other fiddling measures but the one that is going to make the most headlines is the introduction of a new 50p tax rate for anybody earning over £150,000. Now I do not have a problem in principle with making sure those who can afford it pay their fair share in order to help us balance the books as we come out of this recession. The problem I have is that this measure is unlikely to raise much if any new money. Therefore on pragmatic grounds alone I am very dubious about its merits. It seems clear to me that this is yet another example of Brown trying to wrong foot the Tories. He is addicted to this sort of pathetic political trick (see 10p debacle, IHT and many others over the years) and it will be his undoing in the end.

This is now the government's last throw of the dice and they have blown it. The borrowing figures are atrocious and if anything, Darling has yet again understimated what will be required and overestimated how quickly the economy will recover. With this budget I am afraid they have now sealed their electoral fate.

Lib Dems lead the way on fairer tax

I realise that title could be directly from a Cowley Street press release but it is true.

Labour have had twelve years to do something like this but have pussy footed around terrified of being seen as too left wing. They have even done stupid and wrong headed things like abolish the 10p tax band which has taken us in the opposite direction.

Now, the Lib Dems are proposing to increase the tax free band to the first £10,000 of income paid for by closing tax loopholes for big business and the wealthy such as:

• Restricting tax relief on pension contributions to the basic rate
• Taxing Capital Gains at marginal income tax rates, allowing for indexation and retirement relief
• Tackling Stamp Duty Land Tax avoidance and Corporation Tax avoidance
• Subjecting benefits in kind to National Insurance Contributions as well as income tax and applying National Insurance to multiple jobs
• Switching aviation taxes from per person to per plane and increasing taxation on non lifeline domestic flights.

I am 100% behind this move. This is the sort of measure we need that will put £700 in people's pockets who are actually more likely to spend it, and we really that at the moment. It will be interesting to see how the other parties react to this.

I see Alix is already praising this move from the rooftops. She is a long standing proponent of this sort of thing.

LDV has a CIL post on the measures from Vince also.