Newspaper article The Evening Standard (London, England)

The Real Question Is: Can Howard Deliver Savings? COMMENTARY

Newspaper article The Evening Standard (London, England)

The Real Question Is: Can Howard Deliver Savings? COMMENTARY

Article excerpt


LABOUR has accused the Conservatives of misleading voters about when the tax cuts they promise would take effect.

The Conservatives' chief Treasury spokesman, George Osborne, defended his side on the grounds that tax cuts don't alter pay packets with overnight effect. That is surely right.

Changes to income tax and national insurance don't show up on the paypacket until the following April. Tax cuts - or indeed increases - take a while to filter through.

The Conservatives' present statements are not inconsistent with shadow chancellor Oliver Letwin's promise last autumn that he would implement the cuts at once. That means he would simply put them in a May Budget, and they would affect pay packets in the normal way. Tory policy chief David Cameron's statement that any changes would be made at once would only muddy the waters for anyone unfamiliar with how tax usually works.

Of course, the Conservatives' plans to spend more on schools, hospitals, police and defence, achieve [pounds sterling]4 billion of tax cuts and reduce borrowing by [pounds sterling]8billion do sound like something for nothing - which is why the party keeps being pressed on the matter by Labour.

The Chancellor's acolyte Douglas Alexander claimed today that it was a basic law of economics that you could not increase spending, cut taxes and cut borrowing all at the same time. But the Conservatives are not saying that they will increase all public spending. They will match Labour's increases in certain areas - such as schools and the NHS - and spend more than Labour on police. Elsewhere, they will cut back on what they see as unnecessary red tape and bureaucracy, aiming to save [pounds sterling]35billion by 2008. Of that, most would go to increased spending, leaving [pounds sterling]4 billion for tax cuts - in a form still only partially disclosed - and [pounds sterling]8 billion for lower borrowings. …

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