Expect tax rises to be kept in the dark until after the election

Wednesday, May 05, 2010 | Posted by: Richard Jameson
Categories: Protecting your wealth | Tags: tax, Richard Jameson, Alistair Darling, tax policy, PSBR, election, NICs, national insurance, tax rises, Conservative, Liberal Democrat, Labour

So far, the UK General Election has been marked less by the usual debates over different tax policy minutiae and more by who will cut spending from what, when they intend to do it, and at what rate.

The fact that Labour is the incumbent Government has left them somewhat at a disadvantage here, as they’ve had to lay bare their plans.

For example, Chancellor Alistair Darling has announced a 1% rise in national insurance across the board for employers, employees and the self-employed. The Conservatives responded by pledging to increase the thresholds when the additional NI contributions would have effect and make immediate cuts in public spending, using it as ammunition to attack Labour and capitalising on the opportunity to contrast themselves directly against current government policy.

The Conservatives and Liberal Democrats have a window of opportunity to portray Labour as having left a financial mess after 13 years of rule – which, if they win the election, will undoubtedly be blamed as they revise and finalise their own plans for the UK economy.

And so it feels as if the electorate is in a communication vacuum, left waiting for the election dust to settle and the new government term to begin before we discover new government spending plans.

What we do know is that each of the three parties has committed to halving the borrowing deficit (PSBR) by 2014. But recent analysis by the Financial Times (Brutal choices over deficit, 26 April), the Institute of Fiscal Studies and others underlines the issues I raised last October, pointing out the dilemma of whether spending cuts can achieve the deficit reduction alone, or whether tax rises will be needed to balance the books.

As for this election’s tax policies, they seem to be marked by who is campaigning on less ‘bad news’ than their rivals, rather than who is promising more ‘good news’. A refreshing change? Only until the real ‘bad news’ is announced after the election.

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