I mentioned here that it was likely the Chancellor was going to cut taxes using additional borrowing to fund the cuts. Gordon Brown has indicated today that details of tax cuts will be set out in the pre-budget report within the next few days with some analysts predicting a 1p cut in income tax. And there are also rumours that David Cameron will set out his position on tax cuts on Tuesday.
While both parties will pledge tax cuts, there is a marked difference in how they will be funded. Labour recklessly wants to increase borrowing to fund tax cuts which will mean exposing the economy to greater risks in future, as well as large tax rises once we are out of a recession. Brown probably doesn’t care about either. He wants to win the next election at all costs and any short term measure that helps him to do this will be pursued. If he loses the next election, he leaves the Tories straddled with huge debt. If he wins, he’ll stand down during the next term so he won’t be held to account later by the electorate.
The Conservative Party would seek to reduce taxes by making savings elsewhere which I suspect Brown would do if he wasn’t so far behind in the polls. Pursuing a policy of borrowing more money which has got the economy into such a mess is foolish to say the least. This will leave us with the ‘Tory Cuts v Labour Spending’ argument of the previous two elections. The argument then worked in Labour’s favour but it certainly won’t next time as people realise that it’s Labour and specifically Gordon Brown that has got us into this mess with reckless profligacy and a huge waste of public money.