On inheritance tax there is a "credibility gap"

Cameron's plan remains unfair and unfunded

David Cameron has denounced Alistair Darling's 148-page dossier on the "credibility gap" in the Tories' spending plans as "complete junk from start to finish". So are the Tories' spending commitments fully costed? Here's one that isn't.

Cameron claimed again today that sweeping cuts in inheritance tax could be paid for by "taxing the non-doms". The party's pledge to raise the inheritance-tax threshold -- currently £325,000 -- to £1m would cost £3.1bn a year. Cameron hopes to raise this amount by charging non-doms £25,000 a year to live and work in the UK. The Tories estimate that about 150,000 residents would pay the levy, raising £3.5bn and funding cuts in inheritance tax and a rise in the stamp duty threshold to £250,000 for first-time buyers.

But the Tory proposal overestimates the total number of non-doms. The latest HMRC figures show that there are only 120,000 currently registered. Ken Clarke was admirably honest when he conceded: "We don't know how many non-doms will be here; we don't know how much our policy of raising fair taxation from foreigners who work in this country will raise." It's a pity his leader can't be.

The commitment to cut inheritance tax could yet become politically toxic for the Tories, particularly if the suspicion that a Cameron government would increase VAT grows. History teaches us that when in need of revenue, the Tories raise VAT, the most regressive tax of all.

It was Margaret Thatcher who almost doubled VAT from 8 to 15 per cent in 1979 in order to slash income tax and it was John Major who raised VAT by 2.5 per cent to its current level of 17.5 per cent.

Over at Comment Central, Daniel Finkelstein astutely notes that Darling himself still refuses to rule out raising VAT to 20 per cent. The Chancellor's plan to do so in the pre-Budget report was overruled by Gordon Brown. By contrast, Ed Balls (writing outside of his brief) has accused the Tories of secretly plotting to increase VAT and has attacked George Osborne for refusing -- like Darling -- to rule out a rise.

Balls might be keen to use these lines on the campaign trail, but VAT could yet become a dividing line between him and the man he still longs to replace.

 

Follow the New Statesman team on Twitter

George Eaton is political editor of the New Statesman.

Show Hide image

Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland