Budget Day Analysis

If there was one thing the Chancellor’s 2007 Budget Report demonstrated, it is that David Cameron’s Conservatives are now setting the agenda for Britain.

Conservatives have constantly called for simpler and less restrictive business taxes to reverse the declining productivity that British companies have suffered since Gordon Brown came to power in 1997. David Cameron has made it clear that the proceeds of growth should be shared between increased public spending and tax cuts. Cameron has focused on the environment and hugely elevated the importance of climate change, for both politicians and the public. The emphasis has been on green taxes as a replacement for other personal taxes – changing behaviour, and not just adding to the already soaring tax burden.

So, in his Budget, Gordon Brown reduced corporation tax for larger companies, reduced the basic rate of income tax by 2p, and introduced green taxes which will eventually be offset by personal tax reductions.  He also scrapped the 10p band of income tax – something he introduced in a previous Budget – making the system substantially simpler. Inevtitably, there will be winners and losers, but there is no suggestion that the overall tax burden will fall by any tangible degree.

So what can we learn about the Chancellor from this final Budget? For one thing, it shows that he is petrified of the march that Cameron has stolen on Labour since the attempted coup of last summer and the paralysis in Government that has followed. It also illustrates that he will do or say anything to avoid a leadership election against a credible candidate. But more importantly, when Government policy is dictated by the Leader of the Opposition, it shows that our Prime Minister-in-waiting is fresh out of ideas, no longer in control of the political agenda, and no longer in touch with the British people.

Max Chambers

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