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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:

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