What will Gordon Brown be giving taxpayers for Christmas?
David Cameron just attacked a “Christmas tax give away” as unsustainable, saying “tax cuts should be for life not just for Christmas”. But just as uncertain is whether the tax cuts everyone is expecting will reach low income families before Santa does his rounds.
A cut in VAT or an increase in winter fuel payments could be implemented pretty quickly. But a boost to tax credits — Brown’s favoured method of helping families — could take much longer to feed through the system.
As we discovered during the 10p tax mess, tax credits are fiendishly difficult to adjust. A give away next week may not appear in people’s pay cheques until April at the earliest, by which time the snow will have melted and Santa will have long gone.
These practical contraints will be a big factor in shaping the pre-Budget Report. While tax credits are likely to be an important element, they’re unlikely to be the tinsel on the tree.
Jim Pickard
Kiran Stacey
