It would be funny if it wasn’t so tragic, but the week after Ed Balls gave a speech declaring his love for fiscal rules and balanced budgets, David Cameron gives a speech in which he abandons all pretence that the number one priority is reducing the deficit. Of course Cameron wouldn’t admit that that was what he has done, but in offering a large tax cut to the top 10-15% of earners, (and a small one to the top 80%), it sends a clear message that all the rhetoric about getting the deficit down is just that – rhetoric.
That’s not to say that Cameron’s tax announcements today are a bad thing. Frankly, more tax cuts are to be welcomed, although if it was me, I would seek a better distribution than the one that would result from these cuts announced today:
So tax cuts, OK fine, although more progressive would be better. What I find hard to take is the double standards displayed by Cameron. The deficit is a huge issue when spending cuts are on the table, the grandkids start getting a mention and it’s a huge moral issue, but when a tax cut is being announced, you just get some hand-waving about the ‘structural’ deficit, which as Chris Dillow explains, is pretty much unmeasurable so can be whatever you want it to be. It would be great if politicians on both side of the aisle could just cut the crap and stop pretending it’s all about the deficit. Then we can have a grown up discussion about the level of taxation and public spending each side thinks is appropriate for the type of society they want to see evolve.
Decisions on tax and spend should be judged, not in terms of some arbitrary numbers, but rather in terms of what public purpose the government wants to achieve. Cameron implicitly acknowledged that today, by playing to his voter’s desire for lower taxes and a smaller state. Once you clear away the fog of the talk about debt and deficits, that’s what it really comes down to, and that’s what Labour should be arguing too. How much should we tax? Who should the burden fall on? And how much of a role should the state play in the economy?