Dave Cameroon just gave his Tory party speech. After his imperial weights moment, he is back on form. Cometh the hour, cometh the Etonian.
* £12,500 zero income tax threshold (up from £10,000 in fiscal year 2014-15).
* £50,000 40% income tax threshold (up from £31,866 plus £10,000 tax-free in fiscal year 2014-15). [See update on this.]
Both ‘in the next parliament’.
Just one problem.
It is totally and utterly unaffordable by any rational analysis of the numbers. If you are vaguely economically literate, work your way through these slides from the Office of Budgetary Responsibility. Note that this was a personal presentation by Chairman Chote, and does not reflect any OBR ‘line’. But the numbers and the trend lines are the hardest ones we have. I guess that Brave Dave hasn’t seen them.
Off the top of my head, Brave Dave’s election-pitch cocktail would require GDP growth over 4%, no increase in the cost of borrowing, and further massive cuts to welfare in order to meet the Fat Controller’s debt load targets.
Now breathe in and savour the moment.
Pure Tory Bullshit.
You have got to love it.
But will you vote for it?
CHOTE SLIDES1 (pdf. Should open up)
CHOTE SLIDES2 (powerpoint. Should come to you as a download)
I hadn’t read Cameron’s speech directly, relying on Guardian coverage. After a couple of emails I now realise that part of Cameron’s putative higher rate threshold increase is spin. Unlike HMRC, which states tax bands separately (for good reason because there is no single tax-free band at the bottom, it varies slightly for different groups) Cameron’s promise of a £50,000 threshold for the 40% rate is actually a two-band sandwich — the main tax-free band, plus the up-to-40% band. So it has to be compared with fiscal 2014-15’s £10,000 tax free (the standard exemption) plus the current £31,866 40% threshold.
Still, I am not changing the text above. The cuts are undeliverable without completely fanciful assumptions about growth, interest rates and how much more welfare can be cut without widespread civil unrest. And, yes, that is even if Cameron were to wait until the final year of the next parliament, 2020, to deliver the cuts.
What is truly revolting about the Tories is that you could, just about, begin to get towards reasonable assumptions for these cuts — which millions of people would welcome and benefit from — if you increased the two rates of capital gains tax (currently 18% and 28%), and introduced some level of capital gains tax on sales of first homes. But this government, just like the Blair one, is committed to taxing capital less heavily than work. What kind of message does that send to society?
Well I wrote this on 1 October and on 9 October the FT runs a column saying exactly the same thing, also citing OBR numbers. Here it is, but you will need a sub. Of course, the FT is more polite than me, merely accusing Cameron of ‘arrogance’, ‘deceit’, and ‘cooking the books’.
More on 10 November 2014:
The FT has now run a deeper analysis of the OBR numbers, plus latest Treasury receipts, and concludes that to meet Osborne’s austerity targets welfare cuts will have to be massively increased from 2015. This contrasts with recent comments by Brave Dave Cameron — who is either very stupid or a brazen liar — that the worst of austerity is over. In reality, only half of the cuts promised by Osborne have been made. It is all here in the FT, but you will need a subscription. Cameron and the Fat Controller were also told in July by the International Monetary Fund that the UK has no apparent choice but to raise taxes from 2015. And Cameron and the Fat Controller have more recently been severely criticised by the Institute for Fiscal Studies (FT sub needed) over their constant efforts to diddle the numbers.