Danny Alexander has told the Observer that substantial tax cuts are highly unlikely for five years. Alexander argues that
‘the tax burden is necessary as a significant contribution to getting the country’s finances in order. So it will have to stay at that level for quite some time.’
Given that the income tax threshold will rise to £10,000 over the course of the parliament, designed to help lower earners, we can take it that there will be no tax cuts for the well-off and hard pressed middle classes. So the 50 percent rate stays, which is not wholly foolish strategically as Labour would preserve it. The squeezed middle classes pose more of a problem for the coalition. Their benefits and tax credits will be cut, tax on their consumption is rising, tax on the gains of their long-term investments has risen and may rise again and there is to be no relief on their income tax.
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