Tuesday, January 4, 2011

The jobs tax is back

One of the most successful attacks against Labour during the campaign was the branding of Labour’s budgeted National Insurance rise as a tax on jobs. The term stuck, looked great on posters and in headlines, talked to the growth agenda and was a definite policy redline between the two parties.

Fast forward 8 months and unbelievably it’s back. In case you missed it, today saw VAT increase from 17.5% to 20%, and Alan Johnson took to the airwaves to say it was the wrong choice and that instead we should be raising National Insurance (which would mean about a 4% jobs tax rise).

And knowing how catchy the phrase “tax on jobs” was Labour have also been out and about trying to brand VAT as a tax on jobs (because people will buy less, even though a 2.5% decrease didn’t really make people buy more) and therefore companies won’t make as much money so jobs will be lost. Do you follow the odd leftie logic there which avoids the growth / disincentive to employ arguement completely.

To back them up they have the CIPD saying that the VAT rise will mean 250,000 jobs lost by 2015-16 three times the jobs official figures say will be lost as a result of the NI increase (not forgetting other measures predict 2.5m new jobs created). Except it turns out that the CIPD got those figures by their head, who happens to be a Labour party member, ringing up a few friends and asking how many jobs they thought they’d lose, multiply it up and there’s your quarter of a million you were looking for.

So the tax on jobs is back and here to stay, you can have either the Labour or Conservative flavour depending on your political persuassion.

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