A tax cut too far

Sunday 22 October 2000 19:00 EDT
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If Gordon Brown, the Chancellor of the Exchequer, has £10bn more in the kitty than was previously expected, there are several good things on which he could decide to spend the money.

If Gordon Brown, the Chancellor of the Exchequer, has £10bn more in the kitty than was previously expected, there are several good things on which he could decide to spend the money.

He could cut income tax on the low-paid, thus continuing to "make work pay" for soon-to-be-fewer-than-1 million people unemployed and claiming benefit. He could also increase the state pension for poor pensioners (while clawing the rise back from the better-off). And he could continue to pay off more of the national debt, which is a prudent long-term objective for an ageing nation.

The one thing he should not do, however, is clear. The last thing he should spend the fruits of economic growth and sound budgetary management on is cutting duty on petrol and diesel. These taxes raise valuable money while suppressing pollution and congestion. Next week's pre-Budget report will test the metal of this Iron Chancellor.

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