In a pre-election Budget, Alistair Darling declares that now the economy is recovering, it’s possible (and desirable) to cut back on borrowing. So he announces a new income tax band for very high earners.
… The tax change could be set to come in the following year. So voters will still have their chance to accept or reject it as they like.
But I’m a shallow, vain little man, so I’m mentioning it anyway.
I was wrong about the timing of the announcement. And, on reflection, it makes more sense to say it now rather than later. For one thing, the markets want to see that the Government is serious about reducing the deficit in years to come. For another, the Tories would bang away on the ‘taxes will need to rise’ drum for month after month, and announcing this tax rate now sets the terms of that debate.
They’ll soon find that they too are trapped, along with Labour, by ‘taxes will need to rise’. So if they oppose the new top rate, they’ll have to explain why they favour the burden of tax rises falling more on people who aren’t very rich.
And kudos to Ewan Aitken, who plugged the political, social and economic wisdom of a higher income tax rate in light of the recession a good five days before me (although, as he notes, such a rate is not exactly a new idea).
(I’m assuming that the media reports are accurate. If not, then I’ve just made myself look pretty stupid.)