Wednesday, January 7, 2009

Brown To Steal UKIP Policy?

Well, obviously not explicitly. But it is the same policy nonetheless, and good ideas remain good ideas no matter who says them...

Gordon Brown is considering raising the tax-free allowance to £10,000 as part of measures to help families struggling with the credit crunch,...

Even though many lower income households face savage tax credit withdrawal rates, pushing effective marginal tax rates up towards 70% and more, this move would shave 20% off for starters.

Somebody earning £10,000 or over would stand to gain £800, a major boost in hard times. Those gaining the most would be those on the lowest incomes, helping make work pay.

Upping the limit would also benefit those earning more, because they too would only start paying basic rate tax at £10,000, [Labour MP John McFall] added.

I would prefer to see the higher rate threshold reduced and/or the basic rate raised a little, if it would allow for a higher allowance and/or lower tax credit withdrawal rates.

Reversing the 2p basic rate cut to pay for a higher personal allowance would not only be a good move politically, perhaps repairing some of the damage wrought by Brown's 10p rate fiasco, but also be a fantastic boon to low earners.

Having already shot his fiscal rules to pieces, and the economy in such turmoil, Brown has an opportunity to radically re-shape the tax system in Britain, simplifying it and lifting millions out of the tax net.

Unfortunately, I am assuming this will all be paid for by extra borrowing rather than deep cuts in government spending, but if the choice is spending it on a tax cut for the low paid, or on some ill-conceived Keynesian infrastructure project, I vote for the tax cut.


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