This picture adequately summarises my feelings on the VAT rise

January 4, 2011

I understand the need to raise revenue, I really do. I understand that Osborne thinks a VAT rise is less damaging than an income tax rise. What I don’t understand is why he”d implement a policy that he knows will lower retail sales when retail sales are already decreasing. An export and manufacturing-led recovery can only go so far, especially when you’re simultaneously cutting support for, say, the marine energy industry. I don’t understand why Cameron, with his project of detoxifying the Tory brand proving really rather tricky, allowed Osborne to go for a policy that smacks of Thatcher. Sorry, that should be ‘smacks people about like Thatcher’.

It’s possible that this in fact a canny strategic move, preventing Labour from arguing about the balance of taxation and spending cuts that comprise our deficit reduction strategy. Indeed, after Milliband’s complaints today, it will prove difficult for him to argue that taxes should be raised in place of other cuts. However, I’m more inclined to chalk this one up to yet another instance of over-hasty decision-making.

If Osborne really must tax something, how about land values? Assuming we simultaneously reform planning, of course.

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