Over at the New Statesman, James Plunkett, who is leading the Resolution Foundation’s Commission on Living standards, looks at what we’ve learned from the recent interventions by Nick Clegg (pushing for a £10k income tax threshold to help the lowest-paid) and Danny Alexander (urging this be paid for by ending higher-rate pension relief) — and what those interventions might mean for George Osborne’s budget this March…
If there’s one thing Alexander’s intervention confirms it’s this: the key question for the 2012 Budget is no longer whether the Lib Dems will get anything on personal allowances but how the next increase will be paid for. This marks a big change of tactics for Clegg’s team from previous budgets. They’ve come hard out of the blocks in a very public way and not just to argue for the allowance move itself — easy words, after all — but putting a big money, progressive, revenue-raising measure front and centre. … And, make no mistake, for those on low or modest pay, it’s a change in emphasis — if it pays off — that could be hugely important. …
So all in all, 20 minutes in to Budget 2012, it’s probably fair to scratch up 1-0 to Team Clegg. They’ve come out early and marked their territory well. And in higher rate pension tax relief they’ve identified an area of public spend that there’s long been a good case for reviewing. Ultimately, of course, if a week’s a long time in politics, six weeks is an aeon in budget negotiations. Staking your claim early is bold but it’s also risky. The key question now is whether the Lib Dems can hold on for the win. One thing’s for sure: with their funding ambitions now out in the open for all to see, any further cuts to tax credits in March would be a stinging humiliation.
You can read James’s post in full here.
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3 Comments
“Very good idea by the Lib Dems. Tax relief at the higher rate on pensions for the rich of over 150k a year costs MORE than the entire public sector pensions bill that we are regularly told ( and lied to) by the governement is unaffordable.
Tax relief MUST be reduced on high pensions if the government has even the slightest notion of fairness and all being in it together. Well done danny Alexander, for once.”
From the comments on that article. Nice!
Where have all the Statesman lefties gone?
Instead the comments are being dominated by righties complaining that our ending of tax relief is theft! We just can’t win!!
Umm, as welcome as the move to raise allowances to £10k is it still does not go as far as the party’s previously stated ambition, namely to raise allowances into line with the national minimum wage for full-time workers (currently about £11.8k/year).
For sure £10k is a nice round number, but creating the link to the minimum wage makes explicit the LibDem wish to help the low paid.
Secondly, we are failing if we don’t emphasise how raising allowances is the simplest, most direct way of helping all tax-payers simultaneously, yet ensuring those in greatest need get the largest proportional gain – it is the definition of progressive taxation.