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Ed Balls – tax cutter?

February 18, 2012 10:01 pm

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In an article for tomorrow’s Sunday Times, Ed Balls has reiterated his call for George Osborne to reverse his VAT hike:

“the Chancellor should announce a temporary reversal of his VAT rise. This is part of Labour’s five point plan for jobs, which also includes tax breaks for small businesses taking on extra workers and bringing forward essential infrastructure investment.”

However, is Balls suggesting that he might welcome tax cuts more broadly? He seems to suggest that when he says:

“if George Osborne can’t bring himself to reverse his VAT mistake, he has other options. For the same amount of money, he could cut the basic rate of income tax by 3p for a year. Or raise the income tax personal allowance to over £10,000. Or increase tax credits for almost 6 million working people by around £2,000. It would be better to cut VAT now – it’s fairer and quicker and would help pensioners and others who don’t pay income tax. But any substantial tax cuts to help households and stimulate the economy would be better than doing nothing.”

Ed Balls – tax cutter? That might make a few Tories choke on their cornflakes tomorrow morning, but it also puts the Chancellor in the unenviable situation of being outflanked on tax cuts. What happens next? It’s your move George…

http://twitter.com/robertsjonathan Jonathan Roberts
Personally I think the NI tax break for SMEs taking on new jobs is the best policy Labour have at the moment. There are plenty of businesses out there who could do with an extra pair of hands, but currently they don’t have the fiscal incentive to create jobs. A NI tax break will encourage them to do so, it will get people off benefits and back into work, which will help reduce the deficit, whilst their discretional spending will put demand back into the wider economy.
Too much political debate is on secondary issues at the moment. If Labour can really push hard on an agenda for private sector job creation it will begin to regain real economic credibility in my view – but this policy seems to have been announced on the quiet. It’s a shame as it has real potential.

000a000
I have to agree with this. Part of the problem we face is household over indebtedness, so encouraging employment (NI break) should be higher priority than encouraging
excess spending (VAT cut).
Many small business owners I know feel they were hard done by during the period
of Labour government, perhaps measures such as described above could help them
win with this audience. The same small business owners certainly don’t feel the
Tories are on their side at the moment, so are a ready audience.
They should also explore some relaxation of employment regulation for small
businesses. Many owners are frightened about the process surrounding new employees
in times of uncertainty.
AlanGiles
”
Too much political debate is on secondary issues at the moment. ”
Well, one of the biggest debates at the moment is on the future of the NHS. Hardly a “secondary issue”

treborc
But as people will say why the hell did labour not cut tax, a VAT cut is not going to get the UK working, s for the simple reason companies will absorb it as they have already cut to the rock bottom.
But the problem is the market in the EU is dead, exports has to rise to get the majority of companies around me to start employing.
It’s no joke to say Tesco are getting ready to take people on benefits into work we can see it.

TomFairfax
Anybody aware of the events leading to and following the Great Crash in 1929, and the content of Senate hearings in the 1950′s to determine if a repeat was possible will know that George Osborne is unaware of such things because he is publicly taking actions that contradict all the lessons of that disastrous period and repeats the same errors in trying to implement a response that is known to have made things worse.
Fortunately for us the Yanks are aware (obviously) and the effect will be we’ll be dragged up on the coat tails of the US recovery, but no thanks to George. And probably not as fast as would be the case if he hadn’t decided to take the ridiculous actions he did in 2010/11.
Still the man who positively tore into ‘inflationary’ QE as a disastrous policy and a potential 1 trillion National debt due to borrowings has managed to show himself a hypocrit (though possibly a wiser man than he started out as) and achieve the status as the man who gave us the 1 trillion National debt whilst supposedly reducing it.
As for tax cuts. The essentials don’t have vat. If the treasury needs to do something, it would be better that it had a bigger bang per buck, which I suspect means George will do something about NI, which should at least avoid sucking in imports.

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