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
    +1

    Comment number 542.

    336. Name No6 I choose not to have children, my choice. I'd quiet like a new car but I don't expect the tax payer to give me the money.
    --
    You stated families with children should be taxed at a higher rate to reduce burden on the tax payer, you have no idea how much it costs to have children, so god forbid you never have children, But I wonder if you would refuse child benefit if you ever did?

  • rate this
    -1

    Comment number 541.

    Is this overshot of the borrowing target by Dave's gang got anything to do with the BoE QE ideas? And if so, is this money being borrowed to help the banks to help the economy b lending to business? Something which they appear reluctant to do. Or is it going towards the unemployed or somewhere else, because what caused the overshoot? Poor maths by George?

  • rate this
    +3

    Comment number 540.

    The saddest thing about Ed Balls is that he is a smart guy, well educated in economics - he knows what he is saying is complete and utter clap trap. Hi rhetoric is entirely about picking away at the scab of individual self interest amongst the population and goading the chancellor - and nothing to do with credible policy.

  • rate this
    +3

    Comment number 539.

    I see most of the Tory fanboy opposition to this appears to centre on the Shadow Chancellors name!
    Presumably because as with the NHS "reforms" whether there is sense in what anyone who opposes Osborneomics says is ignored with the mantra "there is no alternative"
    The fact is no country has ever cut it's way out of a recession and tax reductions for the poorest (who spend the money in the UK) work

  • rate this
    0

    Comment number 538.

    @504 Jonathan

    Thanks for the apology. I hope they bear fruit too. Just one point regarding your previous comment, many of the tax payers you claim are paying for the student loans of todays students were themselves educated free of charge, therefore they would be highly hypocritical look down on students that are having to pay £9000 per year to put themselves through an education.

  • rate this
    +6

    Comment number 537.

    You can't borrow your way out of debt. You can't borrow your way out of recession. Those countries which haven't tightened spending - France, Greece, even the USA - have had their credit rating downgraded and now spend more on interest on those debts.

    Ed Balls has learned nothing from his mistakes in government. He's a fool trapped in socialist dogma. Ignore him.

  • rate this
    +1

    Comment number 536.

    As shadow chancellor he will inevitably float alternative ideas and challenge the Government's Economic Policy, that is his role.

    All those immediately rubbishing his views ant trotting out the "its all Labour's mess" line, should first ask, "Are the Government's economic policies actually working?" If you think yes then come on here and say so and explain why you feel this, I'm truly interested.

  • rate this
    +4

    Comment number 535.

    "People and the nation are trying to clear debt at the moment so any growth that does occur is real, not fake,borrowed spending. Talk all you like ED, anyone with any sense isn't listening."

    Osborne is borrowing FAR FAR MORE than Labour - you're in a fantasy world complaining about Lab debt- the economy is being destroyed and he's not even achieving a reduction in his core promise on borrowing.

  • rate this
    +4

    Comment number 534.

    No tax cuts Balls. Next time £50 billion is available for quantitative easing, spend it on building affordable housing instead. Set up colleges, using unemployed builders to train young people as builders, fund it by reducing university places. Demand in the economy will grow, the government will get a rental income and an asset to be sold in future if necessary. People will be properly housed.

  • rate this
    -1

    Comment number 533.

    If Ed Balls was a Company Director he would have been declared bankrupt and barred from holding a similar position by now! How on earth he is shadow chancellor is beyond logic.

  • rate this
    0

    Comment number 532.

    ANDY THE THINKER.

    The government want lots of immigrants in this country.

    They want this because the country is in a massive amount of debt.

    Allowing mass immigration pushes wages down and raises unemployment.

    Lower wages, higher unemployment means it is now harder for the people to pay their bills.

    The debt was created ON PURPOSE

    Then you got WORKFARE

    POWER/CONTROL

    THINK

    CONNECT THE DOTS

  • rate this
    +1

    Comment number 531.

    You can say what you like Ed, it's not like George is actually prepared to listen to anyone, is it? Added to which, how annoying is the tories constant blaming everything on labour? You've had two years. You can't use that excuse for ever

  • rate this
    +2

    Comment number 530.

    Banks rely on debt to survive. Pay their CEOs enormous sums to perpetuate that.

    Debt has always existed - in one form or another. The escalating debt is compounded by constant market speculation on basics such as water, food and energy.

    All governments/countries are guilty. It's a scandal that in the UK the low/middle paid via PAYE pay the most income tax/NI. Public sector pay both via PAYE.

  • rate this
    +1

    Comment number 529.

    I believe tax cuts would be a good idea since they'd bolster consumer confidence, but I disagree with Mr. Balls when he suggests they ought to come from further borrowing on the part of the government. Further cuts are necessary even if they are painful. If we are ever going to get back on track we need to cut the deficit and then start on the gargantuan task of reducing our national debt.

  • rate this
    -3

    Comment number 528.

    Ed and Co had no idea what to do with the economy when they were in power , they still have no idea apart from the opposite of what the current government is doing. For a tax obsessed party it's a bit rich. People and the nation are trying to clear debt at the moment so any growth that does occur is real, not fake,borrowed spending. Talk all you like ED, anyone with any sense isn't listening.

  • rate this
    +1

    Comment number 527.

    477.clifford-one
    "I do not feel I am owed anything by this state or country... people seem to feel they are owed something by the state"

    Too right they do, especially those that have paid taxes all their lives to fund a welfare state and now find that they have to pay again when they need to use it.

    How would you feel if you were asked to repay your Student Loan AGAIN when you retired?.

  • rate this
    +4

    Comment number 526.

    235.zipperty
    "Labour got us into this. They cannot get us out."
    Did they also get all the other counties in the world into this mess? You have bought the Tory lie! If you bother to look at growth figures, we were on a growth pattern-until....Summer of 2010. This coalition government is certainly not "getting us out of it"!

  • rate this
    +4

    Comment number 525.

    Andy The Thinker
    please live up to your name. check the graph. it undermines almost all tory arguments. labour spent huge amounts to bail out the banks. the tories never argued with this policy. please look and please think. all daily mail readers please do the same -
    http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data#zoomed-picture

  • rate this
    -4

    Comment number 524.

    Had Balls, Brown and the rest of their Labour cronies not been so profligate with our hard-earned taxes for 13 years by lavishing them on excessive benefits on the undeserving, we might well have been able to make some concession along the lines he suggests.

    As he got the country into its present mess, he's just about the very last person to tell the government what it should do.

  • Comment number 523.

    All this user's posts have been removed.Why?

 

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