CHANCELLORS of the Exchequer always enjoy a degree of independence that is extended to no other minister in the Cabinet. The Prime Minister may make his views known on the political dimesions of financial policy but the Chancellor will usually decide which taxes and other measures should be used. This week George Osborne has raised VAT by two-and-a-half percentage points to 20 per cent as his single most important tax increase towards eliminating the country's deficit. He has said that no other course was open to him but this view is contested by many experts.
In choosing it, moreover, he has also gone against previous Conservative and coalition opinion that this increase will be regressive in character and as such will hit the poor proportionately harder than the rich. During last May's election campaign both David Cameron and Nick Clegg used the word regressive about any increase in VAT but this seems to be yet another coalition opinion or promise that has been abandoned. Some months ago the highly-respected Insitutute for Fiscal Studies said that a rise on the scale introduced by Mr Osborne would cost the poorest tenth of British people more than two per cent of teir income while the richest tenth would contribute less than one per cent. Did Mr Cameron mention fairness as one of the political objectives he wanted to be respected when appointing Mr Osborne as Chancellor?
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