Thursday, 24 April 2008

Its not the first time Gordon has taxed the poor but this time circumstances are different

Always worth a read,Martin Bright on the New Statesman's blog talks of Gordon Brown's big test.

Martin points out that

When Brown was chancellor, he always defied the doom-mongers. Wise commentators would regularly advise that the downturn was just around the corner, that he couldn't sustain his juggling act of increasing investment in the public services while keeping the economy on track


He recalls a similar moment back in 2002 when Brown as Chancellor put 1% on national insurance.when

According to one furious Sunday Telegraph commentator at the time, this amounted to "a £4bn tax on jobs", which would "damage Britain's competitiveness and could increase unemployment".


But the tax got little negtive reaction.Why?

At that time the sceptics in parliament were to be found on the Conservative benches, and who cared about them? No one on the Labour back benches was likely to complain about a cash investment in the health service taken from employers' contributions. But one factor above all made the context of that Budget completely different: the economy was in a rude state of health.


And that is the difference the economy is on the back foot now and in

such circumstances, the government knows stories about the public concern over the 10p rate become self-fulfilling. The issue is first raised by constituents. MPs then repeat those concerns publicly; journalists naturally report this and then people read what is said in the newspapers and get even more worried. And so the concern gathers deadly pace. Such a cycle is very difficult to break, especially against a background of extreme economic uncertainty

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