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Tax giveaway will beat the slump, says Brown
Joe Murphy, Political Editor17.11.08
GORDON BROWN today declared he can beat the slump with a tax giveaway worth billions of pounds.
In a Commons statement, he said families would feel less pain and the country would escape the worst of the recession more quickly.
“The downturn can be shorter and less deep if that action is matched elsewhere,” he told MPs.
His statement was the clearest indication yet the Government was determined to try to beat the slump by injecting £15 billion of borrowed money in the form of tax cuts and higher spending.
But ministers admitted the rescue could carry the prospect of possible tax rises after the next general election.
Mr Brown said economists who were forecasting a deep and prolonged recession had not calculated the potential benefits of co-ordinated international action to stimulate economic growth. Showing supreme confidence despite calamitous new job losses in the City and elsewhere, he pre-empted the Chancellor's pre-Budget report due next Monday by effectively confirming such a stimulus would be at its heart.
Earlier he said at a press conference: “Britain, like many other countries in Europe, is ready to make its contribution for a temporary and affordable fiscal stimulus.
“It is now clear that the need for an urgent fiscal stimulus, within a medium-term framework of fiscal sustainability, is overwhelmingly accepted across the world.”
There was speculation that he and Mr Darling aim for families to have more money in their pockets by Christmas. The average household could benefit by several hundred pounds in the short term.
But Lord Mandelson admitted that tax cuts this year could be followed by tax rises to repay the debts in future.
The Business Secretary told the BBC that “a medium term adjustment some years ahead” could be needed to balance the books. He went on: “I've already said that if you take action now to expand borrowing you know you'll have to make structural adjustments later on, but that is later on, when we're through this recession.”
Shadow business secretary Alan Duncan said Lord Mandelson had blurted out the truth that taxes would rise after the election. “He has 'fessed up to what Gordon Brown is not prepared to admit — that unfunded tax cons now will leave British taxpayers with a cripplingly expensive bill later,” he said. “No amount of spin can hide the economic reality that reckless borrowing will leave the British people with higher debts and higher taxes in years to come.”
Carl Emerson of the Institute for Fiscal Studies said taxes were likely to rise in three years time — a year after the likely general election year of 2010. “At some point the British taxpayer is going to have to repay it,” he said.
China, Japan, Germany and Australia are among the countries that have announced stimulus packages. President-elect Barack Obama is planning major tax cuts in January.
The CBI today said the UK's recession would be tougher and longer than first thought, with unemployment reaching a possible peak of close to 2.9 million.
Reader views (9)
To counter-spin a deceiptful old internal McLabour mindset phrase to describe Crash Gordon's tax-tics, following this horrendous 'bank-corruptcy':
'It's a great debt to bury bad over-spending'.
[without anybody noticing!?]
- Dave, cumbria
More spend and waste from the party that has specialized in recklessly misusing our taxes for 11 very long years.
- Roger, Staines.
Mr Problem and Nobby - you are two cynical bods
- Keith Price, Luton, England
I suppose Gordon is betting that the taxpayers need borrow "only" another £15billion and he can win the next election. The trouble is that those taxpayers have had enough of borrowing and they've had more than enough of Gordon. Still at least he will go out with a splash - even if we have to pay for it!
- Dave, Bucks, England
Brown was wrong foe eleven years as Chancellor so why should we think that he is right in his proposed action now?
- Len Welsh, Grays England
What are you going to do, Gordon?
Reduce VAT? Decrease the duty on fuel? Reduce NI or income tax?
No, none of the above. Give a few quid to the poorly paid via tax credits so they vote for you, funded by those of us who won't.
- Nobby Clark, Perth, Scotland
That's the problem - nobody believes Gordon. Nor Mandelson. Nor Osborne. Nor any of them. But you can believe me - because I'm going to quote a review published by the Centre for Policy Studies in October 2008, entitled 'The Price of Irresponsibility'. Which says that the nation's current debt is equal to £96,000 per household. That is a heckuva lot of taxes we, our children, our grand-children and their children are going to have to pay to set the poor old country right.
Scary, isn't it?
- John Problem, Hackney Wick, London, UK
Brown and Mandelson have the right solution to the Credit Crunch and it is about time George Osborne stopped being so partisan at a time of global crisis.
- Keith Price, Luton, England
If tax breaks and extra borrowing now might reduce the effect of the recession, but it will certainly extend the return to a stable economy.
The alternative is to take our medicine now in a sharp shock. Get it done with - clear out the rotten businesses, bad banks and bankers, and overvalued assets. After that the only way is up and we can start building our economy again. At the moment it's hard to determine which businesses will survive and are worth working with. The uncertainty will only continue - confidence will take too long to return.
So is it worth that elongation of economic pain for what can only be the desperate attempt of a political party to remain in power?
Beware the desperate politician. They'll seldom work in the public interest.
- Tim, London, UK
