Tag Archives: tax cuts

Public Services or Tax Cuts? Let’s be honest, you can’t have both

The Conservatives seek to frame pretty much every general election (with the exception of “Get Brexit Done”) as Tory tax cuts versus Labour spend.

In 1997, Labour sought to avoid this by ‘shadowing’ Conservative expenditure plans, a trick that Rachel Reeves seems set to repeat in 2024. Hunt’s budget is likely to try to set up the same dilemma by offering tax cuts now, funded by unspecified cuts to public expenditure (meaning public services) somewhere down the line, on the assumption that Reeves – rather than he – will be left to implement them.

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2 October 2023 – today’s press releases

  • Hunt rules out tax cuts as Conservative soap opera continues
  • Water bill hike: Bosses paid £41m in bonuses while customers asked to pay for upgrades
  • Liz Truss’s £18,000 golden goodbye same as five-year mortgage hit for typical Blue Wall family
  • HS2: Rishi Sunak makes Liz Truss look like a political genius
  • Covid Inquiry: Sunak’s failure to send messages is another “Conservative cover up”

Hunt rules out tax cuts as Conservative soap opera continues

Responding to Jeremy Hunt’s latest comments this morning ruling out tax cuts this year, Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

The Conservative Party are fighting like rats in a sack, while

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So, no abolition of the 45p rate after all…

45p tax cut U-turn: Now scrap corporation tax cut and bankers bonuses too

Responding to Kwasi Kwarteng’s U-turn on abolishing the 45p rate of tax, Liberal Democrat Leader Ed Davey said:

This humiliating U-turn comes too late for the millions seeing their mortgage rates soar because of this botched budget.

The Conservatives must now cancel their conference and recall Parliament, to sort out this mess for the sake of the country.

The corporation tax cut and the bankers bonus rise need to be scrapped and we need a clear plan to help mortgage borrowers cope with eye-watering interest rate rises. It can’t be

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21 September 2022 – today’s press releases

  • Business energy bills announcement: a temporary sticking plaster
  • IFS debt analysis: Taxpayers footing the bill for Truss’s ideological obsessions
  • Conservatives handing banks a £6 billion tax cut, new research reveals
  • Calls for an Investigation into Failed Welsh Government Insulation Schemes
  • Demands Welsh Government ‘Names and Shame’ Property Developers Failing to Act on the Building Safety Scandal
  • Dental Crisis: Only 34% of Patients in Southwark Have Been Seen by an NHS Dentist in Past Two Years

Business energy bills announcement: a temporary sticking plaster

Responding to the government announcement on bills for businesses and the public sector, Liberal Democrat Treasury Spokesperson, Sarah Olney MP said:

This temporary sticking plaster comes too late for the many small businesses that already closed their doors for the last time because they couldn’t afford soaring bills.

The Conservatives have sat on their hands for months while treasured pubs, cafes and high street shops went to the wall.

This delayed announcement will leave our small businesses, schools and hospitals under a cloud of damaging uncertainty. The government have no plan beyond these next six months, paralysing businesses who need to make decisions for the long term. Support for high streets and public services should be in place for at least the next year and include measures to improve energy efficiency and cut bills in the long term.

The announcement shows the Conservatives have no plan and no understanding of the pressures facing our businesses and public services.

IFS debt analysis: Taxpayers footing the bill for Truss’s ideological obsessions

Responding to IFS analysis which shows debt is being left on an unsustainable path by the government, Liberal Democrat Treasury Spokesperson Sarah Olney said:

Liz Truss is asking hard-pressed taxpayers to fund her ideological obsessions in the middle of the biggest cost of living crisis in a generation. This is no way to govern Britain.

The Conservatives are prioritising record oil company profits and bankers’ bonuses whilst families struggle to pay their own heating bills.

This Government has lost all sense of fiscal responsibility. Future generations will be paying off the Conservatives’ debt for years to come with no guarantee of economic growth.

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Unlike Labour, Lib Dem MPs will oppose Budget tax cut for better off

As I said on Monday, the bit that annoyed me most about the Budget was that better off people were getting  a tax cut when the benefit freeze continued and only a third of what was needed was put back into Universal Credit. Add to that the people who have their much-needed disability benefits cut back for the most arbitrary of reasons after deeply flawed assessments and you can maybe see why I am so fuming.

Astonishingly, Labour is backing the Tory plansalthough some may revolt.

So it’s good to see that Vince Cable will lead Liberal Democrats in voting against the tax cuts and asking for the £1.3 billion to be spent on reversing the cuts to social security. The press release actually says welfare, but I really wish they wouldn’t call it that. Social security is important for everyone. There needs to be a safety net to help those in the most difficult situations at any time. It’s what a civilised society does. It should be enabling and freely given, not grudgingly given with unreasonable expectations written into its heart as it is at the moment.

Vince said:

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William Wallace writes…We need to challenge Conservatives on Tax cuts

Right-wing Conservatives like Boris Johnson and Priti Patel are calling again for tax cuts to ‘free’ the economy.  It’s always popular to call for tax cuts, so long as you don’t link them to spending cuts; so it’s a priority for Liberal Democrats to link the two, and point out that the Brexiteers’ agenda is also one that shrinks the state further, and enforces continuing cuts in the NHS, social care, children’s services – the entire welfare state – education, bus services, even police and prisons.

And the Brexiteers have a problem.  They promised, of course, that they could spend £350m a week more on the NHS – a promise given by a campaign master-minded by Matthew Elliott, founder and first director of the Taxpayers Alliance, a lobby/think-tank dedicated to cutting state tax and spending.  He had used the same cynical ploy in leading the campaign against the Alternative Vote, arguing that the cost of the referendum and the new system could better have been spent on the NHS: knowing that this would appeal to hesitant voters, but not intending that any more money should be spent.  

Their problem is that the narrow majority that voted for Brexit were, and remain, deeply divided on public spending.  One of Lord Ashcroft’s latest polls, intended to inform the Conservative Party conference, warns that roughly half of those who still support Brexit support further cuts in spending and tax, while half – the less well-off, the ‘left behind’ and the ‘just about managing’ – want an end to austerity.  Pushing through Brexit, with a resulting fall in tax revenue on top of the corporate tax reductions right-wing think tanks are calling for, would force yet another squeeze on public services of all types – and would lose the Conservatives the working class support they think they have won.

Boris Johnson’s Conservative conference speech relied on the ‘Laffer Curve’ to square the circle: the assertion that cutting corporate taxes will increase revenue, as companies and their owners are freed to increase investment, create more jobs, and spur faster economic growth.  The record of successive Republican Administrations in the USA has shown that this does not work.  The second Bush Administration cut taxes without managing parallel cuts in spending, leaving the Clinton Administration to struggle with the accumulated deficit it inherited.

Behind this commitment to continuing cuts lies a deep antagonism to the public sector and to those who work in it, and an insistence that private provision always works better than public.  Teachers, they argue, are overpaid and underworked, civil self-interested and intrinsically inefficient bureaucrats.  But never a word from the libertarian lobby about rent-seeking executives in the private sector, or examples of corporate failure or corruption in the provision of services.  And it’s corporate taxes they want to cut deeply, more than personal taxation.

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Why there is nothing illiberal about cutting taxes

The decision by the Liberal Democrats in 2010 to include as part of its manifesto, and subsequent coalition negotiations, the raising of the income tax threshold was the culmination of years of debate in the party about whether to cut taxes or increase public spending.

Because tax cuts are more often associated with right wing parties, there is a tendency to view them as profoundly illiberal.

But actually cutting taxes enforces a profound liberal principal, that of devolving power, the power to spend their slice of the wealth in the economy,  down to the lowest possible level, that of the individual, and away from the centralised state. That increases the power held by the individual relative to the state, and so is surely as liberal an idea as can be.

Of course, that principle only applies when the taxes being cut are those of lower earners, the wealthy already have a lot of power relative to the state, and are not likely to benefit by having some more.

So tax cuts for lower earners  increase the freedom of the individual to do something.

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