Pre-Budget Report: A turning point on tax?
If reports are correct, Monday’s Pre-Budget Report could prove a major political moment. Not only will it signal the Government’s appeal to the electorate ahead of a General Election in 2009 or 2010, it will also confirm the developing chasm between the Tories and Labour on how to respond to the recession. But, and maybe most interestingly, it could mark a turning point in the debate about tax in the UK.
The Government has been clear in recent days that it will seek to target tax cuts on the low paid and over the weekend it has suggested that it may cut VAT and incredibly introduce a new higher rate tax of 45p for earnings over £150,000. Some of moves may be temporary but the longstanding political taboo about raising income tax for the wealthy to fund public services and/or give a fairer tax deal to the low paid will have been broken. Combine this with the planned drive under Barack Obama to make the US tax system fairer and to clamp down on tax avoidance and evasion by the wealthy and you have the makings of a radically new debate about tax in the anglo-saxon economies. Very good news indeed!
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