The LibDems launched their plan to cut the basic rate of income tax by 4p in the pound in July 2007. We now see both Labour and the Tories clamouring to get on board this agenda. Although for different reasons, both of the old failed parties’ ideas fall well short of the mark. The economy and hard working people need action now if the recension is to be softened and shortened.
The LibDems’ proposal means that hard pressed people and low and middle incomes will get money back in the pockets. Rising mortgage bills, the fear of unemployment and high heating costs mean that the shockwaves of the financial crisis are being felt in households across Britain. When the banks were in trouble, they got rescued. Millions of families who are finding themselves in trouble must be helped too. Research has shown that if you help these groups in their pocket, they are much more likely to actually go out and spend their money. This pumps money back into the real economy – which helps everybody.
Labour have alluded to changes in their Pre-Budget Report being in the shape of unfunded tax cuts. This is a very high risk strategy which will create major problems for our economy in the long-term. If Labour brings in tax cuts they will be here today, gone tomorrow. We will all pay for them in the end.
The Conservatives are hinting at small cuts which will do nothing to rebalance Britainâ€™s unfair tax system. They still think millionaires are the priority when it comes to tax breaks, not the low and middle-income families who need help now. They have unveiled plans to reduce National Insurance payments for firms which employ people who have been unemployed for more than three months. However, their plan is timid and weak (FT: Toriesâ€™ ideas are too timid, says business | Politics Home: Tory Jobs Plan Won’t Work.) It will help some businesses but it does not go far enough and the impact will be slow to materialise. Clams that it will be funded by reduced benefits payments sounds nice, but the actual maths behind it is deeply flawed as most of it is guess work. It does not help people at risk of loosing their jobs now and it will not help them stay in the job they already have. If Pick’N’Mix Screws folds, Two41 Screws down the road, would could have employed some of Pick’N’Mix’s staff straight away, will now wait for three months before they do so.
“If this recession has features that demand more active fiscal policyâ€¦ taxes should be cut. This would allow the market to determine which parts of the economy shrink and which flourish to replace them.” Letter from 16 economists, Sunday Telegraph, 26/10/08
ONLY the LibDems have fully costed and affordable plans – and they will help boost consumer spending in the economy, as well as helping struggling families. Click here for more details of the Liberal Democrats’ Recovery Plan.