The Lib Dems’ tax cut con

Nick Clegg is right when he says that “Labour are on the wrong side of the biggest issue in British politics – the argument about the big state versus the smaller state.”

But which side are the Liberal Democrats on? His plans for tax cuts look about as sound as a No10 soufflé. The 4p cut in income tax would be replaced by a local income tax – so a tax shift, not a tax cut. The £20 billion cuts in Whitehall spending are not all for tax relief, some of this (they don’t say how much) would be diverted to other state spending. Compared against the £679bn of state spending planned for 2010/11 – rising by £30bn a year – it’s laughably low.

The small change from £20bn is simply not enough to lower the tax burden to any noticeable extent in these economic conditions. Instead it seems Clegg wants to strike a tax-cutting pose, which is to be applauded, but to keep his grassroots happy he’s saying “don’t worry, it’s all a con”.