Monday, 10 March 2008

Lib Dem’s turn to have Darling steal their policies

The great policy thief looks like he is about to strike again!

Alistair Darling, Labour Chancellor and policy plagiarist, is rumoured to be about to “unveil a host of new measures in his first budget on Wednesday aimed at cutting carbon emissions” in what is to be billed as “Labour’s greenest [budget] to date.”

Should we be surprised? Of course not. In his first pre-Budget report, Darling ditched months of Labour plans in a naked attempt to out-Tory the Conservatives by offering an Inheritance Tax cut that Nick Clegg argues will help just 6 per cent of the population. Nick suggests that these are richest 6 per cent, though the most South Easterly 6 per cent might be nearer the mark!

Now, Darling appears poised to out-Lib Dem the Liberal Democrats by finally addressing Climate Change in his budget. Naturally, however, the real motivation is not the global but the financial climate, as he faces a hole in his budget that will require tax rises of £8 to £9 billion a year

In truth what we can look forward to is a token gesture on the environment in a budget that will not satisfy environmentally or equitably.

The Liberal Democrats have proposed a massive shift of taxation from income to pollution. Lib Dem proposals would seek to raise (if I remember correctly) £18bn a year from new environmental taxes, with which we would finance a massive tax cut off the basic rate, reducing it to the lowest level since… well… the last time the Liberals were in power. The personal allowance would soar to well over £7,000 a year, so that those on very low wages would pay almost nothing. And the Council Tax would be abolished forever – a long overdue measure.

By comparison, we can expect a rather lukewarm series of ill-thought-out measures from Darling. For example, the rumoured "showroom tax" of £2,000 on the price of the most gas-guzzling cars may indeed discourage consumers from buying them, but it is not the purchase of these cars but driving of them that is the source of pollution: this measure will not only unnecessarily penalize those who drive very short distances in very flash cars, but will also create no incentive to those who have already bought such a car, or who choose to do so despite the new tax, to economise on fuel. Indeed, perversely, economic theory suggests that if the car is more expensive, the owner needs to drive it more to ensure that they get their money’s worth!

By far a more effective means of tackling carbon emissions would be to abolish all taxes on the purchase of cars, and raise the money instead by increased in fuel duties. As somebody who has become painfully aware of the cost of petrol recently, I can attest to the fact that there is nothing more effective at encouraging economic use of fuel than seeing the counter on the petrol pump spin round.

Sadly, while it is unlikely that Darling will satisfy anybody with his budget, it is equally unlikely that the media will recognise that he is beginning to accept the wisdom of Lib Dem policy. And with a General Election probably two years away, we are saddled with Labour incompetence for some time to come.

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