Wednesday, December 10, 2008

Logical conclusions

David Cameron opposes temporary tax cuts to counter the recession:

we need to act now to set our economy and our public finances on a sustainable path - because doing so will help make the recession shorter and shallower.

If people know that they will be hit with massive tax rises in a couple of years, they’re less inclined to spend more now. If businesses know that Government borrowing is rising to unsustainable levels they know that will de-stabilise our economy and so they’re going to be wary about playing a more active role in that economy.

For these reasons, fiscal responsibility is the right economic strategy for the short-term as well as the long-term. It is right for today, as well as tomorrow. Dealing with Labour’s recession and dealing with Labour’s record debt are not separate priorities – one urgent, the other to be put on the back burner. They are intimately connected priorities and they are both urgent priorities.

Fair enough.

But if you believe that the quality of the recovery will be determined by the level of public borrowing, and that deficit reduction is thus an urgent matter, surely you should be pressing for immediate temporary tax rises – to be followed eventually by tax cuts only when you’ve achieved spending cuts already?


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