Naively, I missed a sixth potential function of Osborne’s new Office for Budget Regulation – to protect David Cameron against Tories who want tax cuts. Here’s the theory, which I heard last night from more than a few people. The OBR is programmed with a static rather than dynamic model of tax collection – ie, it judges a reduction in a marginal tax rate as a net loss to the Exchequer, ignoring the extra industry it would unleash. So it says “no tax cuts, we must pay off debt” and strengthens Cameron’s hand against his own party.
If this sounds daft, remember that the Tory party is still in therapy over the issue of tax cuts. I don’t include Osborne in this, but there still plenty of artists formerly known as Portillistas who are still unable to debate the issue logically.
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