Balls heightens the pressure on Osborne to cut taxes

Labour's new line: any tax cuts are better than no tax cuts.

With the Budget now just a month away, both Labour and the Lib Dems are finalising their wish lists for George Osborne. By far the most interesting intervention in today's papers is that of Ed Balls, who uses a column in the Sunday Times to put the case for tax cuts to stimulate the economy.

You'll be familiar with Balls's call for a temporary cut in VAT and a National Insurance tax break for small firms (both part of Labour's ubiquitous five point plan for jobs) but should these demands fall on deaf ears, the shadow chancellor has a plan B. If Osborne "can't bring himself to reverse his VAT mistake", he writes, he has other options. For the same amount of money, he could "cut the basic rate of income tax by 3p for a year. Or raise the income tax personal allowance to over £10,000. Or increase tax credits for almost 6 million working people by around £2,000." With the economy on the brink of a double-dip recession and unemployment heading towards three million, Balls rightly argues that some tax cuts are better than no tax cuts:

It would be better to cut VAT now - it's fairer and quicker and would help pensioners and others who don't pay income tax. But any substantial tax cuts to help households and stimulate the economy would be better than doing nothing.

By lending his weight to the Lib Dems' key demand - an accelerated increase in the personal allowance - Labour's Keynesian rottweiler heightens the pressure on Osborne to offer some relief. From his time as shadow chancellor onwards, Osborne has always opposed what he calls "unfunded tax cuts". But many Tory MPs, sharing Arthur Laffer's belief that tax cuts are self-financing, would like him to do nothing more than reduce the burden. And with the Chancellor likely to undershoot the OBR's deficit forecast of £127bn by around £3bn, he will find it harder to argue that any giveaway would be fiscally irresponsible. The Institute for Fiscal Studies, for instance, has said that Osborne could cut taxes by £10bn without triggering a bond market revolt and a rise in interest rates.

As Tory MP David Ruffley said of a temporary VAT cut:

Even if we can't find the money for tax cuts from public spending savings, we could add it to the deficit and it is not going to send the markets into a tizzy, I don't think anyone really believes that. The markets will not go haywire if there was a modest loosening in borrowing in the short run if it was for the right reason.

The Chancellor, an inveterate political schemer, will no doubt have something up his sleeve but with Labour, the Lib Dems and his own MPs all urging him to slash taxes it had better be something special.

George Eaton is political editor of the New Statesman.

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You may call me a monster – but I'm glad that girl's lemonade stall got shut down

What's wrong with hard-working public servants enforcing perfectly sensible regulations?

Who could fail to be moved by the widely shared tears of a five year old whose innocent lemonade stall was brutally shut down by evil bureaucrats? What sort of monster would not have their heartstrings tugged by the plaintive “I've done a bad thing” from a girl whose father tells us she “just wanted to put a smile on people's faces”?

Well me, actually.

There are half a million cases of food poisoning each year in the UK, and one of the reasons we have stringent controls on who can sell food and drink, especially in unsealed containers, is to try to cut those figures down. And street stalls in general are regulated because we have a system of taxation, rights and responsibilities in this country which underpins our functioning society. Regulation is a social and economic good.

It’s also pretty unfair to criticise the hard-working public servants who acted in this case for doing the job they are no doubt underpaid to do. For the council to say “we expect our enforcement officers to show common sense” as they cancelled the fine is all very well, but I’m willing to bet they are given precious little leeway in their training when it comes to who gets fined and who doesn’t. If the council is handing out apologies, it likely should be issuing one to its officers as well.

“But these are decent folk being persecuted by a nanny state,” I hear you cry. And I stand impervious, I’m afraid. Because I’ve heard that line a lot recently and it’s beginning to grate.

It’s the same argument used against speed cameras and parking fines. How often have you heard those caught out proclaim themselves as “law-abiding citizens” and bemoan the infringement of their freedom? I have news for you: if you break the speed limit, or park illegally, or indeed break health and safety or trading regulations, you are not a law-abiding citizen. You’re actually the one who’s in the wrong.

And rarely is ignorance an excuse. Speed limits and parking regulations are posted clearly. In the case of the now famous lemonade stand, the father in question is even quoted as saying “I thought that they would just tell us to pack up and go home.” So he knew he was breaking the rules. He just didn’t think the consequences should apply to him.

A culture of entitlement, and a belief that rules are for other people but not us, is a disease gripping middle Britain. It is demonstrated in many different ways, from the driver telling the cyclist that she has no right to be on the road because she doesn’t pay road tax (I know), to the father holding up his daughter’s tears to get out of a fine.

I know, I’m a monster. But hooray for the enforcers, I say.

Duncan Hothersall is the editor of Labour Hame