The Worm That Turned
The debate within Labour about the direction of its tax and spend policy has intensified, with Blairite allies attacking Gordon Brown’s flagship tax credits system and calling for tax cuts.
Alan Milburn, the Labour former cabinet minister and election strategist, yesterday launched a critique of a central plank of the chancellor’s strategy. In a debate on last week’s Budget, Mr Milburn praised Mr Brown’s track record but told MPs that “radical” reform of taxation was needed to tackle the poverty gap.
He blamed the chancellor’s tax credits system as being “largely” responsible for almost 1m more poor people facing marginal tax rates of 60 per cent or more – in effect for every extra £1 earned they lose 60p in tax credits and benefits. Mr Milburn advocated “directly targeted” cuts in tax for low-income families, such as lowering the 10p starting rate of income tax.
I’m staggered. Labour MP’s calling for tax cuts!? [Steps to window] Nope… can’t see any flying pigs.
Lowering the 10p starting rate of income tax will achieve very little. Raising the threshold to something a little more significant will help. Gordy doesn’t like that idea as it also helps out the “well off”. That is why he is so keen on “targeted” tax credits. However, targeted tax credits are a complete shambles. HMRC are sinking under the added pressure and the people that are supposed to benefit from tax credits are being asked to pay back ridicluous sums of money when the system screws up.
The Treasury dismissed Mr Milburn’s comments last night. An official said: “It is not the Treasury’s habit to respond to statements made by backbench MPs.”
To paraphrase, “it is not the Treasury’s habit to listen to the genuine concerns of our own party members. Butt out shorty!”
Stephen Byers, the former cabinet minister, said immediately after the Budget that he thought the “the limit of the burden of taxation has pretty much been reached”. Bill Rammell, the education minister, was this week publicly rebuked by the Treasury for voicing similar sentiments. Speaking at the launch of a white paper on further education, Mr Rammell said: “We are probably about at the limit of what people are prepared to pay to improve public services.”
Hallelujah! Except we’re not seeing any improvement in public services, are we? That is the real problem. What Milburn, Byers and Rammell are really saying is “We can no longer justify increasing the tax burden with little or nothing to show for it.”
Of course all of this could be a convoluted plot to discredit Gordy and keep Bliar in power for the forseeable future. This has always been a real quandry for me. As much as I hate Bliar, I hate Brown even more (you may have noticed). What is worse: Brown the Chancellor or Brown the Prime Minister? Both options fill me with dread.
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By Devil's Kitchen, March 29, 2006 @ 12:53 pm
This has always been a real quandry for me. As much as I hate Bliar, I hate Brown even more (you may have noticed). What is worse: Brown the Chancellor or Brown the Prime Minister?
Same here…
DK
By Politicalog, March 29, 2006 @ 2:22 pm
If Brown became PM, you can bet he would hire a “Yes” man as his Chancellor. He would have complete control. There is a thought to keep you awake at night.
Better the Devil you know? (pardon the pun)