MIP Perspectives
Nick Clegg is as believable on tax cuts as he was on tuition fees
written by: Nick Wood
The louder Nick Clegg talks about tax cuts, the faster I count my spoons.
To adapt a famous line from the great American writer and individualist Ralph Waldo Emerson, that will be the reaction of many to the news that the Deputy Prime Minister has become an overnight convert to the cause of lower taxes.
Of course, it is all baloney, and strikes another blow against the fast-disappearing credibility of the political class. Clegg no more believes in cutting taxes than he does that the Lib Dems will win the next election.
But that has not stopped him from securing his best headlines in months.
'Speed up the tax cuts, urges Clegg,' boomed the front page of the Tory-supporting Daily Telegraph, suggesting that the serial flip-flopper had undergone yet another change of heart.
Read the fine print and it's a different story. Clegg may want to rush forward an increase in the income tax allowance to £10,000 a year. But his plan to help low earners will be paid for by higher taxes on the better off.
'Clegg demands higher taxes for Middle Britain,' would have been a far more accurate headline on his latest musings, though one rather less likely to boost his faltering opinion poll ratings.
As ever, his proposal (and it is only that because it has not been agreed by Chancellor George Osborne) was light on detail.
It would cost around £10billion (since he is not urging higher borrowing) and would be paid for by higher taxes elsewhere, such as the Libs beloved 'mansion tax' on homes worth over £2million, abolition of the pension reliefs enjoyed by higher rate taxpayers, higher so-called green levies and, a familiar one this, plugging tax loopholes exploited by the lawyers of the rich.
In short, it is a con. It is yet another depressing reminder that the politics of envy are not dead. They are alive and well and stalking the corridors of Downing Street.
And nor should the low paid be dancing in the aisles. They can be sure that their lower income tax bills will be eroded by cuts their tax credits or increases in direct taxes, leaving them little better off, if at all
If Clegg were really serious about getting this country out of the pit of debt dug for it by Labour, he would be singing the praises of the entrepreneurs, wealth creators and private sector managers who represent the only genuine hope of getting the British economy back on its feet.
He would be talking about targeting tax cuts on the wealthy creating sectors of the economy, not giving our business men and women yet another reason to hire even more ingenious tax lawyers, move their affairs off shore or decamp to lands where personal and corporate tax rates are much lower.
But instead, along with too many other members of the political class, he would rather grub for votes by indulging in a bit of light banker-bashing and ignoring the fact that financial services produce vast tax revenues and support millions of jobs - the one industry in which we are a world leader.
If Clegg wanted to be taken seriously, he would also be urging another assault on our bloated public sector, which is still projected to absorb more in cash terms over this Parliament than it did under Tony Blair and Gordon Brown. Cut spending and then you can genuinely cut taxes all round.
Hasn't Clegg noticed that we already have a top rate of tax of 50 per cent (our highest for more than 20 years) despite the scant evidence that it brings in any significant amounts of extra revenue?
Hasn't he noticed that his Government is about to axe child benefit for any family where one parent has the temerity to earn over about £43,000 a year? Hasn't he noticed that VAT has been raised to 20 per cent?
This was another exercise in political smoke and mirrors and not one that will be taken seriously in Whitehall.
Yes, the Coalition is officially committed to raising the threshold for paying income tax to £10,000 four years from now.
But judging from the appalling state of our public finances, the imminent slide back into recession, unemployment heading for three million, the Lords-inspired sabotage of attempts to curb massive welfare bills, borrowing still running at £130billion a year, only the deluded believe that this is a promise our gap year Deputy PM will be able to keep.
There is more chance of tuition fees being axed than this kind of fiscal wish-making coming true.
Still, it has given Mr Clegg some decent headlines. And I guess this was why Dave let him out of the playground for a day.
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