Make an illegal U-turn on a public road, and you’re liable to face a fine. But it won’t be anything like the levy Alistair Darling’s latest move has imposed on the public purse.
Darling has responded to the 10p tax row by raising the personal tax allowance by £600. This will give those on low and middle incomes an extra £120 this year. But it’s going to mean the Government borrowing an extra £2.7 billion. Is this the most expensive U-turn in history?
Remarkably, this isn’t the only tax blunder to dog the Government this week. It’s also backtracking over proposals to tax foreign corporate earnings.
With all these political manoeuvres, Darling must feel more like a rally driver than the Chancellor of the Exchequer.
Faced with the possibility of higher tax bills, many UK-based companies have threatened to move their core operations overseas. This could be a major blow to the economy, offsetting any benefit derived from taxing profits made abroad. Hence the U-turn.
It’s clear that the Government gave insufficient thought to both the scrapping of the 10p tax rate and the foreign earnings proposals.
"Let’s tax companies’ foreign earnings!" someone must have said. "It’ll bring more money back to Britain!"
"Yeah!" said someone else. "That sounds really good! Let’s do it!"
As long as it sounds good, that’s all that matters! Never mind that it could be a complete disaster...
So the Government goes ahead and announces its grand new idea. But then someone points out the nasty side-effects.
You could say it’s the Law of Unintended Consequences. But I prefer to think of it as the Law of Should-Have-Been-Foreseen-But-Clearly-Weren’t-Because-Nobody-Bothered-To-Look Consequences.
Brown and Darling are serving up a masterclass in how to alienate an electorate. In case you ever find yourself in power — and decide you no longer fancy the job — here’s how to make everybody hate you in three easy steps:
Step one — Announce an ill-thought out policy, which will appeal to some people, but antagonise others. This works best if it’s a fundamentally bad and unworkable idea.
Step two — Leave the whole sorry mess to stew in its own juices for a bit. Wait until the cries of the antagonised become deafening.
Step three — Make an embarrassing retreat, annoying those people who actually did like the idea. Don’t worry about those who didn’t like it. They’re still suspicious, and they still hate you!
Voilà! You’ve managed to upset anyone who might have voted for you.
And if you think things are taking too long, Hazel Blears, Secretary of State for Communities and Local Government, has a neat idea for speeding up this process...
Ladies and gentlemen... the Cabinet!
The Cabinet meets in Westminster to discuss the important affairs of state. Hands up anyone who has a problem with that. Anyone?
Anyone even care?
Well, Hazel Blears seems to think we do. She’s floated the idea of holding cabinet meetings in town halls around the country.
"Just imagine if the Cabinet meeting took place at the British Legion, Swindon, the Town Hall, Grimsby, or the Victoria Community Centre in Crewe. There is no good reason why not," she said in a speech yesterday.
There is a good reason why not. It’s a pointless and stupid idea.
This is a PR stunt, isn’t it? It’s obviously been cooked up by some ‘blue sky thinker’ from an overpriced consultancy. This isn’t ‘thinking outside the box’... this isn’t even thinking. It’s just silly.
Unless we get a glimpse of a briefing paper (such as that unwittingly offered to photographers by housing minister Caroline Flint yesterday) we don’t know what gets said at Cabinet meetings. But I’m not sure I really care. What I care about is the decisions that are made, and whether they’re any good or not.
The Government’s twin tax U-turns this week show that, behind closed doors, the Cabinet is capable of dreaming up some spectacularly foolish policies. But turning the whole process into some kind of tedious, Radio One roadshow affair would just make that private incompetence a bit more public.
Blears’s idea is rubbish. I have a better one. Instead of sitting around on plastic chairs in a draughty leisure centre in Hull or Truro, why doesn’t the Cabinet simply keep doing what it’s always done, but do it well.
Stay in London, but put some more thought into things, rather than wheeling out ill-considered policies in an attempt to grab headlines.
Is that really too much to ask? I fear it may be...
Why you should expect another big oil move
"I find myself agreeing with George Bush!" said a somewhat astonished Garry White this morning.
Commodities man Garry and the President of the United States aren’t exactly peas in a pod (a statement unlikely to ever be true unless Americans one day vote in a man with a Rochdale accent). But, for once, Garry and George are singing from the same song sheet.
Congress want to stop filling America’s Strategic Petroleum Reserve, in an attempt to keep the oil price down. Bush says it won’t work — and our man Garry agrees.
"Anyone with half a brain that looks at the figures will realise he’s right," says Garry.
So the USA is incapable of lowering oil prices. Meanwhile, there’s a very big reason why they could be about to surge — Iran.
"Iran is playing a game of ‘bait the superpower’" says Garry. "Which can only mean one thing for oil."
Find out why Iranian power games are great news for Garry’s number one oil investment...
Never mind the credit crunch — here’s the shipping crunch!
"It’s all about tankers, not bankers!" quips Manraaj Singh with a twirl of his moustache.
In today’s Profit Hunter, Manraaj explains how the credit crunch has delivered a top-notch investment opportunity. Here’s the lowdown:
- We’re in the middle of the biggest commodities boom in history
- Soaring demand for commodities means soaring demand for ships to transport them around the world
- Realising this, many shipping companies placed extra orders for new ships
- But then the credit crunch hit, meaning some of these orders have had to be cancelled. The finance isn’t there any more
- But the commodities boom continues unabated. Those raw materials still need to be transported
What we’re left with is a shipping crunch. There simply aren’t enough ships to meet demand. So shipping companies are set to benefit from rising freight prices.
"We’re going right to the heart of this trend!" says Manraaj. "That means Asia!"
Manraaj has spent several months scoping out the juiciest-looking Asian shipping investments. Now he’s preparing to pounce...
Until tomorrow
Ben Traynor
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