It begs the question once again in my mind whether the Tories are being too cautious, and whether Gordon Brown's response will now be to pledge to scrap inheritance tax altogether, or, at the very least, exempt all family homes from its ambit.
Restricting inheritance tax to a "millionaires only" tax is a surefire voter winner with the aspirational middle-classes the Tories need to win back, and Brown is far too smart not to realise this.
The Prime Minister has already shown himself a past master in the art of political cross-dressing. Surely this is a case for more shameless stealing of the Tories' clothes.
7 comments:
I think the political cross dressing goes both ways with the conservatives getting no dom tax dodgers to stump up for it
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It makes you wonder what Labour has got up its sleeve to counter what could be a relatively successful week for the Tories. Having said that, if all we know about the Tories by the end of the week is that they'll cut taxes, will it be enough to swing an election?
If Osborne goes one better and increases the personal tax allowance to £9,000 or so for everyone and scraps tax credits and the prohibitively expensive administrative costs, he may be on to a winner. It would also cut the £2bn annual tax credit frauds to zero whilst sending out a strong message that work pays!
The Tories have played an absolute blinder on this one at several levels.
I've always been cynical about the Tories committment to fairness or a willingness to tackle the super-rich... and I had (sadly) anticipated that they would give into the immoral and wrong-headed campaign to completely abolish Inheritance Tax.
But here we have them retaining Inheritance Tax but easing the 'Stealth' tax burden imposed by Brown on reasonably well-off families, AND paying for it through a popular and populist fixed charge on the super-rich who want to live in the UK. It takes the tax a great way back towards what it ought to have been all about.Brilliant!
Now, if Brown, as you suggest Paul, is forced into abolishing Inheritance Tax, he will be abolishing one of the few remaining wealth-redistributing taxes left in the UK; moreover, one that would have been made more 'fair' by the promised Tory reform. Any abolishing of the tax would also re-ignite the sleazy smaell of 'Labour and rich friends'.
Talk about a world upside-down - it's the Tories who come out with the radical and more equitable tax reform and it's Labour who still have far too close a relationship to dubious rich types.
It is a brilliant move. My family falls precisely into the category which would benefit. I was seriously tempted when I first heard the announcement - I had to remind myself this was a Tory proposal and gave myself a stiff talking-to. If a borderline Spartist like me can be briefly impressed, more rational people on the middle ground are likely to be won over long-term. Brown needs to move on this, and fast.
There is nothing 'equitable' about Osborne's proposals - the biggest gainers are those who inherit over £1 million (like Osborne himself), who get a tax cut of £240,000.
I don't think Brown wants to come third, so he isn't going to propose to abolish IHT altogether. I might naively hope he'd come up with a better proposal than the Tories (like keeping the current threshold, or even lowering it, but placing it on each individual legacy rather than the whole estate - though such a cut would also be difficult to fund). But even if he did, I don't think he'd be able to sell it now.
Labour have really dropped the ball on IHT. I wonder if the only way they can re-capture ground here is to come clean and admit to the elephant in the room: That we desprately need IHT to force the sale of "family homes" as it's the only thing currently applying downward pressure to property prices; scrapping the threshold or even just exempting family homes from IHT is going to seal the deal on us going back to the pre-WWII status quo of only a privileged minority owning property.
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