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Wednesday, April 07, 2010

Tax debate in the UK election

The UK election is only in its second day but already the strategies of the two main political parties have become clear. It Labour Party is running the classic “don’t want to change horses mid-stream” campaign. They claim that they are the party to bring the UK out of recession and the Conservatives are too risky. Meanwhile the Conservatives are pushing an agenda of moderate change; the Conservatives are presenting themselves as a party of hope for the future. Already the Labour Party’s message has become a contentious battle ground that could lose Labour the election.

The most significant issue so far is the tax debate, which may go on to dominate this election. In the last budget before the election was called, the Labour government increased the National Insurance rate. The Conservative Party has called this a “tax on jobs” and vowed to reverse the increase. At the same time the country’s largest employers took the unusual step of backing the Conservative Party position, saying that the Labour Party’s tax increase will indeed kill jobs.

This is a problem for the Labour Party because it weakens their case that they are the party of economic recovery. Prime Minister Gordon Brown’s only defence seems to be that the leaders of industry have somehow been decieved by the Conservative Party, that increasing taxation on a business’s payroll is indeed the best thing for the recovery.

This argument is somehow not very convincing.

Posted by Hugh MacIntyre on April 7, 2010 | Permalink

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