Wince now, but the pain will deepen (From The Northern Echo)

Wince now, but the pain will deepen

10:21am Thursday 10th December 2009 in

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ALL the talk is about painful tax rises to come after yesterday’s crucial “mini-Budget” – but the truth is that there are still not enough of them.

True, most of us will all be a bit worse off after 2011 when National Insurance (NI) contributions rise by one per cent to try to plug a budget deficit as deep as the Grand Canyon.

It is also true that those earning more than £43,000 will pay more – their NI will rise by two per cent – and there will be that raid on outrageous bankers’ bonuses to please the crowds.

But the challenge for Chancellor Alistair Darling yesterday was to prove that Labour could heal the nation’s sickly finances without the heartless slash-and-burn of the Conservatives.

It was a test he failed.

Yes, the Pre-Budget Report repeated the promise to halve the £178bn deficit in four years, but there were no detailed figures, department- by-department.

Instead, with a promise to protect schools, hospitals and policing, other government departments face cuts of up to 14 per cent to bring that deficit down.

Some of the horror to come is buried in the Budget book – such as cuts to legal aid, residential care, higher education, science research, IT projects – but the rest is, conveniently, shrouded in mystery prior to next year’s General Election.

Despite the headlines about tax rises, they will meet only 25 per cent of the cost of halving the deficit. The remaining 75 per cent will come from spending cuts.

Yet the idea that this £178bn “black hole”

must be plugged mainly by savage cuts – rather than clever tax rises – is a scandalous lie.

The Chancellor could raise £27bn a year through a 50p income tax band on earnings above £100,000, by taxing investment income and by lifting the cap on NI contributions, according to the Institute for Public Policy Research think-tank.

It also proposes higher-rate council tax bands (£1.7bn) and the abolition of tax havens (£10bn), as well as scrapping Trident, ID cards, new aircraft carriers and Private Finance Initiative (PFI) schemes (£15bn).

Even the very welcome “supertax” on bonuses is a one-off that will have been consigned to history by next year when bankers can buy yet more yachts.

Somehow, a crash caused by a failure to regulate the rich has turned into a “mine’s bigger than yours” contest on spending cuts – that will punish the poor.

Yet, last week, a funny and relaxed Gordon Brown – yes, even he has such a side – triumphed in the Commons with the taunt that Tory inheritance tax cuts for the super-rich were “dreamed up on the playing fields of Eton”.

There is raw politics here – a chance to embarrass the Conservatives by piling new taxes on the wealthy that David Cameron will oppose – but, for once, political advantage is married with the national interest.

The looming cuts are just too painful.

Taxes (on those who can afford it) must take more of the strain.

IT was great to see Lord Barnett back in Parliament for yesterday’s statement, apparently fit and well after suffering a stroke and a spell in hospital.

The author of the infamous Barnett Formula, who has long since denounced it as hideously unfair to the likes of the North- East, is determined to outlive it – whatever Gordon Brown says…