This will shock many of our readers however I must break my silence on this issue: I do not believe tax cuts are the answer to the current crisis. Lately it seems like the Conservatives, Labour and the Liberals are at pains to be seen as the tax cutters… Cameron proposed slashing National Insurance for all employers who hire someone who has been out of work for three years, the Liberals are proposing to slash 4p from the basic rate of income tax while Gordon Brown used his Downing Street press conference to pledge a significant tax cut in the autumn budget statement due to be made next week.
Whilst in normal circumstances I would whole heartedly endorse tax cuts, after all we have been taxed more under this government than any other in British history and substantial cuts need to be made in due course, however these are not normal circumstances. The most pressing question in my mind, and a question that has been picked up by some commentators, is where is this money for these cuts coming from? Now to be fair out of all the proposed plans Camerons is the only viable and realistic one. Surpise suprise. However I disagree that even his plan will be of any real long term benefit to the economy.
However what concerns me most is the fact that Gordon Brown has indicated that any ‘financial stimulus’ would not automatically mean a cut in state expenditure to compensate. What planet does this man live on?! Has he learned nothing from this crisis?! So if hes going to cut taxes… and hes not going to alter government spending levels… where is the money coming from?… oh yes… MORE BORROWING! Gordon Browns economic incomptence has never been clearer. After taxing and spending taxing and spending and contributing to bring the British economy to its knees… hes going to try to get us out of the mess… by borrowing and spending. He just doesn’t learn does he?
In 1979 Margaret Thatcher inherited a crippled and bankrupt economy from Labour. In order to revive it she had to raise taxes, this policy whilst initially unpopular worked and the rest is history. Her tough decisions, which on the surface stand at odds with traditional Tory tax cut rhetoric, needed to happen if we were to stand any chance of economic recovery. Gordon Brown needs to take a long hard look at history. Britain and the wider worlds finances are not an endless pot. You cannot buy friends. If you are the conviction politician you say you are you will take a lesson from real conviction politicians like Thatcher. You won’t do what is popular, you will do what is neccessary. Tax cuts funded by even more borrowing is not the answer.
‘We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists’ Former Prime Minister James Callaghan