British deputy prime minister Nick Clegg sharply criticized his Conservative coalition partners on Sunday, saying they were “kidding themselves” if they thought they could simultaneously balance the budget and reduce taxes.
The Liberal Democrat leader’s criticism came after the Conservative chancellor of the exchequer, George Osborne, had accused the smaller party in The Sunday Times of having no credible tax plan.
“While they sign up to deficit reduction, they want more tax rises rather than spending cuts,” he wrote.
But they shouldn’t pretend to people that the sums required can be achieved by their homes tax alone. If you want higher taxes to do the heavy lifting, you’d also need to increase taxes such as income tax or national insurance.
Clegg said on the BBC’s The Andrew Marr Show later in the day his party would like to raise taxes on expensive homes. His proposal seemed awfully similar to the one Osborne announced in his budget statement this week: for homes to be taxed more progressively.
Osborne said buyers of homes under £250,000 would pay a 2 percent tax while the rate for homes over £1.5 million would be 12 percent.
The key difference between Osborne’s plan and the “mansion tax” Labour and the Liberal Democrats support is that the first tax is only paid when homes are sold whereas the other parties would tax houses every year.
Clegg also left the door open to further income tax increases for the rich after insisting his priority was reducing the tax burden for lower incomes.
He would not admit that such a policy makes it very hard to balance the budget but did say the government should take advantage of low interest rates to finance investments in the economy, suggesting he would be in less of a hurry than Osborne is to close the fiscal gap.
Clegg’s criticism — that Conservatives are “kidding themselves” and British voters “if they are claiming that it is possible to balance the books, deliver unfunded tax cuts, shrink the state and support public services in the way that everybody wants” — is not unfair either. Beyond further reductions in welfare, Osborne has yet to make clear what cuts he would make to reduce the deficit from £91 billion next year to zero by the end of the next parliament. With the National Health Service exempt, it is difficult to see how other departments, such as defense, education and police, wouldn’t be seriously affected.
But there’s more to this than numbers that don’t add up, Isabel Hardman writes at The Spectator.
Beyond the obvious — “there’s an election on the way and no party wants to appear to be an annex of another one” — the electoral strategies of the two ruling parties are at play.
The Liberal Democrats, polling at just 6 percent in the latest YouGov survey, down from 23 percent in the 2010 election, seek to persuade voters they’re still relevant because they are the only ones who can temper the Conservatives.
The Conservatives, on the other hand, polling at 32 percent — not enough for a majority — make the case that only a majority Conservative government can deliver fiscal discipline and tax relief.
So Osborne argues in his piece that the Lib Dems have the wrong attitude toward the economy while Clegg wants to argue that he’ll bring a new level of honesty to the debate by claiming the Tories are kidding themselves.