The pre budget review is ‘a missed opportunity’ claims Elizabeth Jewkes, Liberal Democrat Parliamentary Candidate for Chester.
“The proposal to temporarily reduce VAT by just 2.5% will give minimal help to the poorest families who are struggling to cope in the credit crunch. It will not reduce the cost of buying food or children’s clothes, as VAT isn’t paid on either of these. Nor will it reduce the cost of fuel bills as vat on fuel is only charged at 5% anyway.
It may reduce the cost of other goods – but just as banks have been accused of failing to pass on reduced interest rates to their customers, retailers are not under any obligation to reduce prices to reflect the lower rate of vat.”
Instead, Elizabeth Jewkes is calling for a dramatic increase in the personal tax allowance. “The tax threshold should be raised so that only people earning over the minimum wage pay tax” she claims. “Allowing people to keep more of the money they’ve earned would put money in the pockets of the poorest people and reduce the reliance on benefits. Loopholes that allow some companies to avoid some taxes should be closed and we should raise the tax levels for people earning over £100,000. These measures would stimulate the economy without massively increasing government borrowing.
The Chancellor needed to be both bold and transparent and he failed on both counts. Any measures should be fully funded by balanced tax increases, not simply sticking it on the government’s credit card, in other words just borrowing the money. The vat reduction could have helped the construction industry which is the hardest hit sector of our economy, but any good it might have done in helping both create & safeguard jobs is undermined by the increase in National Insurance payments.
I am also concerned that so far the only measure identified to fund this is a new tax rate for those earning over £150,000 and even that is delayed until 2011. If he isn’t careful the Chancellor will create medium and long term problems to solve the ones we face today.”