Tax and pensions: Facing reality
He often makes it hard, but you have to feel at least a little sorry for Alistair Darling. Even in better times, Chancellor to Prime Minister Brown had the makings of being one of the worst jobs in the world. Now Mr Darling finds himself neck deep in red ink, much of his boss's making. Like any of us in an unprecedented situation, he has theories but cannot be sure what to do.
Penalising high earners with a 50% tax rate won’t ease the national debt burden, but broader tax rises will, argues Simon Yates
He often makes it hard, but you have to feel at least a little sorry for Alistair Darling. Even in better times, Chancellor to Prime Minister Brown had the makings of being one of the worst jobs in the world. Now Mr Darling finds himself neck deep in red ink, much of his boss’s making. Like any of us in an unprecedented situation, he has theories but cannot be sure what to do.
This background makes it all the more important that policy decisions are explained properly. Ideally, the Government should set out an objective, and then describe the policy measures designed to reach it. The voting public, and, perhaps more importantly given the necessary levels of borrowing, the gilt markets, can then make informed judgements.
It is worth examining the quality of reasoning offered to support the key tax-raising measures in this year’s Budget. These tax rises, along with the National Insurance (NI) rises announced in the 2008 pre-Budget report (PBR), are expected to play the key role in restoring the public finances over the next decade. Given that increasing income tax rates within this Parliament is a breach of a highly important manifesto commitment, some governments might have felt honour-bound to go to the country to seek endorsement of their changed position. At the very least we are entitled to a credible explanation of the policy.
So how did Mr Darling fare? First, we should look at the stated objectives most relevant to the tax rises. These can be summarised as follows:
This premium content is reserved for
Legal Week Subscribers.
A PREMIUM SUBSCRIPTION PROVIDES:
- Trusted insight, news and analysis from the UK and across the globe
- Connections to senior business lawyers within the leading law firms and legal departments
- Unique access to ALM's unrivalled, market-leading reporting in the US and Asia and cutting-edge research, including Legal Week's UK Top 50 and Global 100 rankings
- The Legal Week Daily News Alert, Editor's Highlights, and Breaking News digital newsletters and more, plus a choice of over 70 ALM newsletters
- Optimized access on all of your devices: desktop, tablet and mobile
- Complete access to the site's full archive of more than 56,000 articles
Already have an account? Sign In Now
For enterprise-wide or corporate enquiries, please contact Paul Reeves on Preeves@alm.com or call on +44 (0) 203 875 0651