Sunday, March 16, 2008

My box!

It has been brought to my attention that the new Chancellor called my reputation to his aid last week in seeking to enhance the significance of his first Budget.

It is heart-warming to see my old Budget Box restored to public gaze; but I would rather wish that Chancellor's adhered to my budgetary principles than to the symbol of my four periods in this office.

Indeed in the course of those chancellorships I set out clear principles for the management of public finances and, when not in office, sought to hold other chancellors to the same principles. These self-same principles, I fear, have frequently been breached in the decades that followed.

A Chancellor should seek to reduce taxes and should be honest if that is not possible, if the demands of government require more money to be raised. For complex taxes confuse the public and confuse commerce and prevent the worker working to his best ability. Indeed it was always heart-warming to see her gracious majesty assenting to these important principles by a nod of her head during my many private audiences.

Now Mr Darling laid claim to be reducing taxes; but in fact all the reduction was decreed by the Mr Brown, who is now Prime Minister, some 12 months ago. And indeed the reduction of tax was by no means uniform.

For in reducing the "basic" rate of tax from 22 to 20 per cent, both chancellors also removed the protection offered to the lowest wage owners by the existence of a 10 per cent rate for the first £2,000 of income. In effect those on the lowest wages will pay a greater level of tax whilst the most prosperous will benefit from these new arrangements. This is in effect a partial reduction, a sleight of hand and a dishonest trick.

Now in one respect Mr Darling has acted with full honesty in stating that he proposes to increase excise duties on spirits, beer and tobacco. I am sorry to hear this; as these duties were a prime cause of criminality and lawlessness, especially in the wild lands of Cornwall and other coastal regions. Perhaps enforcement is now more effective and perhaps, also, excise duty is the best means of controlling increasing consumption of alcoholic beverages; but nevertheless indirect taxes of this nature distort the economy and fall hardest on the poor and the families of the poor.

I would not be concerned were these not the self-same people, from whom the Chancellor has removed a beneficial and low income tax rate.

I hear the Chancellor proposes to return income to the poor by other means, styled as Working Tax Credit and Child Tax Credit. Yet in studying his budget report I cannot find that large sums are to be disbursed to the poor. Payments for children are not to be increased this year, not until next year. Some small sums are to be paid to harbour-workers - "pilots" - to relieve the poverty of children.

There is much more that could be said with reference to this "budget"; but, by all accounts, Mr Darling spent little time saying it and failed to enthuse many during that little time. He stares economic collapse in the face and whispers the word "boo" whilst twiddling his thumbs.

The small reduction in income tax payments may yet delay the evil hour during this current year; but next year, it seems, Mr Darling plans to extract nearly 700 million pounds in additional revenue from the economy. I may not agree in entirety with some of the economic principles espoused by my successors within liberalism and, indeed, am still struggling to understand the notions put forward by Mr Keynes. But I do believe we would be in agreement that a government should not be extracting money from the economy during times of hardship.

Mr Darling has given himself 12 months grace. His Prime Minister may be less patient; for he has but 24 months during which he must face the electorate. It may be they propose, next year, to sweeten the electorate with gifts, paid by the increased yield from fuel and vehicle duties, announced this year but levied next year. Indeed Mr Clegg and Mr Cable may find it hard to criticise should Mr Brown and Mr Darling promise another reduction in income tax, paid by this means, as I understand these are exactly the policies my own party now espouses.

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