Raising taxes to pay for tax cuts

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There is, or should be, something rather surreal about the reports that Jeremy Hunt is considering raising taxes in order to, er, pay for tax cuts. Even more so when it becomes clear that the two tax increases he’s considering are part of Labour’s planned financial plan, and that he and his colleagues have roundly condemned them both, repeatedly. Some might see it as an example of redistribution in action – although taking money from one group of well-off people in order to give it to another group of relatively well-off people (who might as a result feel bribed into voting Tory) is not exactly what most of us mean by the term ‘redistribution’. For an added twist, it seems that one of the attractions of implementing these two Labour policies is that it would prevent Labour from implementing other Labour policies – which Labour were planning to use the money raised to implement. By raising the money himself in advance and then giving it away, Hunt’s cunning plan is to force Labour to say which other taxes they will raise to pay for policies which will thus be left unfunded, and thus expose Labour as a tax-raising party.

There is, of course, an implicit assumption in this that everyone will see tax cuts as being preferable to providing decent public services, an assumption which hasn’t exactly been validated by some recent polling. But then, Hunt probably doesn’t mix a great deal with those who are most dependent on those decent public services. Perhaps the most surreal part of all is that Hunt’s cunning plan has been aided and abetted – not to say directly facilitated – by the stupidity of the Labour Party in committing not to reverse any tax cuts announced by the Tories, even when all concerned know that those cuts are going to be predicated on using new money raised as well as assumptions about unspecified cuts to services at some future date which have been built into the government’s five year plan.

It is a monumental act of self-harm by Labour’s foot-shooting tendency which has managed to convince the leadership that the arbitrary fiscal rules which they themselves have invented have some magical status which makes them unbreakable. It’s an act of stupidity which won’t stop them winning the election (although we should be careful not to rule out the possibility that they will find some other way of making even more holes in their own feet in the coming months) but merely mean that they can’t do very much once they’ve been elected, other than try and implement Tory policies with a little more competence. It’s fair to say that competence in a governing party has been more than a little under-rated recently, and a dose of it might be welcome, but those hoping for real change as a result of a change of governing party are likely to be disappointed. Rapidly. The biggest danger is that they will simply open the door to the new English Nationalist Party (although they probably won’t call it that) which is likely to rise out of the ashes of a merger between the Tories and Reform after the election. We really do need to make a quick exit from the dysfunctional state which the UK is becoming.