Cut national insurance contributions, says Liam Fox. Cut capital gains tax, says David Davis. Give tax breaks to married couples, say Stewart Jackson and others. Back wealth taxes to cut taxes on “families and employers”, says Tim Montgomerie.
There’s no shortage of Tories suggesting taxes for George Osborne to cut when he delivers his budget. Yet it’s the junior party in the coalition which is leading the debate on tax cuts – a curious situation which no doubt shocks Tories as much as it infuriates them.
The reasons the Lib Dems are leading the way on tax cuts are straightforward. First, the policy of raising the income tax personal allowance not only made it into the coalition agreement but was included as the main tax priority; inheritance tax cuts were nowhere to be seen while marriage tax breaks have to wait until after the tax threshold reaches £10,000 (and even then Lib Dems don’t have to vote in favour).
Secondly, raising the personal allowance is a policy that unites Lib Dems – socially just, politically popular and ideologically justified.
Thirdly, the Lib Dems are coming up with ways to fund the policy – ending pension reliefs for high earners, a mansion tax, extra taxes on non-doms.
All of which means Lib Dems – both Parliamentarians and members – were ready and willing to back the leadership when they decided to push for the policy to be implemented more quickly.
Meanwhile, the Tories are all over the place on tax. Each time some less-than-ideal piece of economic data is released we get the odd Tory MP breaking ranks to say that we need to scrap the 50p tax rate immediately. Yet more sensible Tories realise that – however desirable it might be in the long term – scrapping the higher rate will do very little for economic growth in the short term.
So we hear calls from other Tories for various taxes on business and employment to be cut. Much more sensible suggestions if the objective is to help the economy, but how often are such proposals backed up by suggestions on how to fund them? In fairness to Liam Fox (above), he did suggest how to fund his ideas: even harsher cuts in public spending. Yet while this suggestion might please right-wing Tories, it’s not something that even Liam Fox can think is a realistic proposition.
Meanwhile it’s left to Tim Montgomerie to make the argument for greater taxes on wealth to fund cuts in taxes on income, but the response from Tory MPs – with their wealthy constituents – is resounding silence.
All of which leaves Tory MPs divided from the leadership, Tory MPs divided from other Tory MPs and Tory MPs divided from Tory activists.
Lack of a common cause on the issue of tax cuts is leaving the Tories wide open to being outfoxed on the issue primarily by their Lib Dem coalition partners but also by the likes of Ed Balls – however unrealistic his suggestions are on the subject. A rather curious position, but one which is going to cause few Lib Dems to lose any sleep.
* Nick Thornsby is Thursday Editor of Liberal Democrat Voice and blogs here.