With just a month to go before George Osborne delivers his Budget speech (21st March), the Chancellor of the Exchequer will not be short of suggestions as to what he should include, be they from friend or foe of the coalition government.
Ed Balls, the Labour Shadow Chancellor, speaking on BBC One's 'The Andrew Marr Show', tabled a number of ideas for stimulating growth such as VAT to be cut, a 3p reduction in income tax, higher tax credits and an acceleration of the planned increased personal allowance to £10,000. He particularly favoured a reduction in the rate of VAT as he believes it is the quickest and fairest way of boosting the economy.
If no tax cuts are forthcoming, then Mr Balls predicts it could put “a permanent dent in our nation's prosperity”. He also stated that the current austerity measures were “self defeating”. The Conservative response to such claims are that excessive borrowing and debt under Labour's watch has been the primary contributor to Britain's current economic plight.
David Laws, the Lib Dem backbencher who is a close aide to Nick Clegg and who had a very brief spell as Chief Secretary to the Treasury for 17 days in 2010, also advocates raising the income tax threshold to £10,000. The move would cost the Treasury around £9 billion but the Lib Dems would fund this by halving higher rate tax relief on pension premiums from 40% to 20%, so Mr Laws told BBC's 'Newsnight' programme.
Laws argues that the most affluent in our society have benefited from the tax relief and by redistributing income away from this top 1 – 5% (equivalent to those earning approx. £60,000 or more), will ensure that those on low and middle incomes receive much needed financial assistance and give the government the opportunity “of ending the austerity on household budgets.”
Why bother doing all those things when all you need to do is to provide a direct tax incentive to employers to repatriate outsourced jobs. E.g. If a call-centre job is given to a UK based first-time employee, the government pays the difference in cost, or gives an equivalent tax credit.
This is simple double-benefit because every new job means more spending in the economy, and fewer people on the dole.
This also helps to ensure companies are not illegally exporting personal data to countries outside the EU. I can’t help wondering when the first class action will be launched aginsta bank or insurance company, and then offshore won’t seem such a great deal.