Ed Balls suggests Budget tax cut options

 

Shadow chancellor Ed Balls: "A VAT cut is the fastest and fairest way to do a temporary boost to demand to get confidence moving"

Labour shadow chancellor Ed Balls has called for "decisive action ... to boost growth", offering suggestions for tax cuts in next month's Budget.

Mr Balls' ideas include a VAT cut, a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.

No tax cut could mean "a permanent dent in our nation's prosperity", he said.

The Conservatives said excessive borrowing and debt under Labour had led to the current financial mess.

Mr Balls told BBC One's The Andrew Marr Show the current austerity measures were "self defeating" and had left Chancellor George Osborne claiming he was "trapped by the credit rating agencies".

The shadow chancellor said he favoured a cut in VAT - which is a sales tax rather than a tax on income - because it would be the "fastest and fairest" way of boosting the economy.

"We've got to get growth back in the economy," he told the programme.

Writing in the Sunday Times, Mr Balls said: "Some people may be surprised to see Labour prioritising tax cuts. But in a crisis there is a premium on what works effectively and quickly to get our economy moving."

He said that such a cut should be funded by borrowing, not more spending cuts.

He claimed it was "absurd" to argue that the £12bn cost of reversing the government's 2.5% VAT rise was unaffordable, when borrowing was £158bn higher than planned because of slower growth and higher unemployment than had been forecast.

"Such a tax cut now would boost confidence, help families feeling the squeeze and help get our economy moving again."

He added: "Without that decisive action in the Budget to boost growth, I fear we are in for a lost decade of slow growth and high unemployment which will leave a permanent dent in our nation's prosperity."

'Menu of options'

As well as Mr Balls' proposed VAT cut, "in an attempt to put pressure on the chancellor ahead of next month's Budget, he also sets out an alternative menu of options which he thinks might appeal to some Conservative and Lib Dem backbenchers", says BBC political correspondent Iain Watson.

"If George Osborne can't bring himself to reverse his VAT mistake, he has other options," Mr Balls wrote.

Michael Fallon: 'Mr Balls is the man who racked those debts up in the first place and now wants us to borrow even more'

"For the same amount of money, he could cut the basic rate of income tax by 3p for a year. Or raise the income tax personal allowance to over £10,000. Or increase tax credits for almost six million working people by around £2,000.

"It would be better to cut VAT now - it's fairer and quicker and would help pensioners and others who don't pay income tax. But any substantial tax cuts to help households and stimulate the economy would be better than doing nothing."

Conservative deputy chairman Michael Fallon told BBC One's Sunday Politics that Mr Balls had not learned "from his time as Gordon Brown's right-hand man".

He said that Labour had built up the debts which the coalition government was now dealing with and all tax cuts had to be funded or there would be "billions of pounds of more borrowing and more debt".

Mr Fallon said Mr Balls' suggestion would put the UK's triple A credit rating at risk and the past week had seen international and national organisations back the coalition's economic strategy.

He also said that the Conservatives were still the tax cutting party, pointing out that Council Tax had been frozen and personal tax thresholds raised, so were doing what they could given the current economic situation.

 

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  • rate this
    +2

    Comment number 442.

    Suggesting that we borrow more to cut tax shows how totally Incompetent Ed Balls really is, along with the Leader of the Opposition they really were the Bodgit and Scarper of our economy and they must never be let anyhere near Government again.

  • rate this
    +2

    Comment number 441.

    Ed Balls makes my blood boil. Yet again, Labour are spouting about how to distribute 'wealth' instead of providing solid details on how they would create it, and i'm talking genuine wealth NOT the debt they have presented to the unwitting public as wealth for the last 10 years.
    I hear them repeat conservatives are complacent, Labours last decade in office defines complacency. Hypocrisy anyone?

  • rate this
    +3

    Comment number 440.

    405.matt mackenzie
    wrote>
    is there any reason why the bank of england,who keeps inventing money for banks, cant redistribute that £50billion to the people, who would then go and spend it in the shops?
    ---------------------
    Spend it on far east electrical products or Indian/Chinese Cheap Fashion? Or maybe just spend it on other non uk owned businesses here?

  • rate this
    +13

    Comment number 439.

    As a nation we need to consume less and produce more.

    Just keeping on borrowing money to buy cheap foreign imported goods is no way to run a successful economy in the 21st century.

    Ed Balls really should know this.

  • rate this
    +2

    Comment number 438.

    A bit rich coming from the champagne socialist millionaires of the Tony Blair project that systematically ruined our country over a period of 13 years.

  • rate this
    +1

    Comment number 437.

    locust man 396

    Clearly you know nothing about Wales. I am talking about ordinary guy and gal, not docs and cops. It is grim in rural Wales for young people & that is why many have to leave. Most country boys have no quals, that not being way of their parents. Hence very low pay if any at all. The military was one escape but with the cuts no longer available.

    Please think before you blurt.

  • rate this
    -8

    Comment number 436.

    @416 Rebbecca Riot
    Typical Labourite, using 2 question and exclamation marks when one will do - what a wastse!

  • rate this
    +4

    Comment number 435.

    Balls is wrong to think the gov't hasn't boosted the economy. The Tories have boosted the economy, according to Mr Pickles overnight, with the power of prayer.

    Now their economic policy of faith, hope and charity is complete.

  • rate this
    +1

    Comment number 434.

    again a lot of Ball !!

  • rate this
    +1

    Comment number 433.

    390. Saurabh

    Problem with funding a tax allowance by cutting spending is it tends to be the poorly paid or unemployed who are targeted for those spending cuts. Which means in effect those who make enough not to receive tax credits etc will be the only ones that benefit and the unemployed & low paid could actually be worse off.

    Sadly most people would jump for joy at that which is depressing....

  • rate this
    +20

    Comment number 432.

    407. Ex Tory Voter

    No. It's the gullible who fallen for the current governments propaganda who have the credibility problem. I loathe all the parties, but Labour did not get us into this mess - the GLOBAL banking collapse did that.
    =
    Indeed and every available economic statistic backs this up.
    The British are becoming a nation of gullible fools and bigots manipulated by an increasing rich elite.

  • rate this
    +16

    Comment number 431.

    There is nothing new about debt. It's as old as all human civilisations.

    The problems lie with 20th/21st century investment banking and punative taxes to pay for it. These investment arms are still above the law plus those who associate with them.

    Tax evasion, avoidance, off-shore gambling, tax havens - welcome to UK plc - little people pay the most taxes all day long directly or indirectly.

  • rate this
    +4

    Comment number 430.

    Ed Balls' suggestions are still carefully designed so that the established powers are not challenged and the status quo is preserved, so they don't work.

    Real fixes:
    - Take REAL control of RBS Retail/Commercial (ditch the rest), make a state bank, give them an explicit 100% guarantee and set lending to SMEs as their reason to exist
    - One big QE, with the new money given DIRECTLY to people

  • rate this
    +2

    Comment number 429.

    Amazing how many people on this blog still fall for the Tory PR ruse that says Labour was fully responsible for the mess in 2008, but the mess we're in now is nothing to do with a blundering coalition government. Cameron is much better at PR than he is at governing a country....

  • rate this
    +2

    Comment number 428.

    Alan B 366

    Labour did not create the world recession I never said so

    I said that labour got us into this - by the expedient of Brown believing that he had mastered the capitalist cyle of Boom (NO) Bust

    In the good times you pay down debt ready for the bad. He reversed this +so our borrowing now is practically severely curtailed

    And even I could see that 7x income + 125% mortgages were rubbish

  • rate this
    +4

    Comment number 427.

    "415.Bradford
    2. Incentivise the unemployed to take low paid jobs rather rather than welfare by raising the tax threshold limit on workers"

    0.5m vacancies, 2.67m unemployed. Tax changes won't create jobs, only *we* can do that by buying UK made if at all possible, even if things cost a bit more. Pay the 'UK made levy', or pay more tax - it's a simple choice.

  • rate this
    +1

    Comment number 426.

    Ed Balls is like a broken record - spend, spend, spend

    not a word from him on how to reduce the deficit other than a naive hope that the economy will recove and the deficit will magically disappear

    how can anyone take anything he says seriously?

  • rate this
    -3

    Comment number 425.

    The tactic of trying to shift the cause to those who oppose his ideas shows that Balls does now accept that like it or not we are in for "a lost decade of slow growth blah high unemployment blah blah permanent dent blah blah".

    He wants us to let him hold the uk purse stings but still he's unable to come to terms or even accept why we are even in this mess. There is no money left Ed, remember!?

  • rate this
    +2

    Comment number 424.

    396 by rebecca riot - usual rubbish?

    ALL wages where you were brought up min wage or less - really?

    police/public service/doctors/lawyers etc etc

    only you could make it up!!!

  • rate this
    +1

    Comment number 423.

    Ed Balls is a man with no gravitas whatsoever....just a yappy little nobody. His kinship with fellow bully Brown tarnished his image, which he continues to blacken further when he refuses to acknowledge that we must bite the bullet to correct the mistakes of the previous Labour administration. Throwing money at the problem is no long-term solution.

 

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