Date published: 2008/11/11
The BBC says:
David Cameron has unveiled plans to reduce National Insurance payments for firms which employ people who have been unemployed for more than three months.
The Tory leader said it would be funded from unemployment benefit savings and would be "fiscally responsible".
It comes as Gordon Brown signalled he backed unfunded tax cuts as a "fiscal stimulus" to get the economy moving.
...
The Liberal Democrats have already pledged tax cuts for low and middle income earners and accuse both Labour and the Conservatives of "timidity" when what was needed, they say, are big income tax cuts.Outlining his policy Mr Cameron said it was "a mistake" to think the government could "borrow without limit" and he believed the government had rowed back on publicised plans for a Keynesian-style "spending splurge".
He believes the NI contributions plan would create 350,000 jobs and cut firms' tax burden by £2.6bn. In effect, the Tories say, companies would receive a proportion of the benefit payment in the form of a tax break.
The £2,500 NI credit would be paid in full for jobs of 30 hours a week or more or half that for part-time work of 16-30 hours. v It would be limited to a maximum of 20% of the workforce and would only be paid to those who had made no redundancies in the previous three, and subsequent three months.
...
There was a mixed response among businesses to the Tories' proposals. John Cridland, of the CBI, said they "would help some small businesses keep people in work" but the British Chambers of Commerce said firms were not in a position to start recruiting.There were also some concerns that it might put firms off recruiting people who had only just lost their jobs.
Meanwhile the Liberal Democrat leader Nick Clegg has said that, under their income tax policies, people earning £30,000 a year would get £1,000 extra in their pocket.
The party is proposing significant tax cuts for people on low and middle incomes funded by closing tax loopholes for the wealthy, pension allowances for higher rate taxpayers and raising green taxes.
Mr Clegg said tax cuts had to be "big" to have any effect and accused Labour and the Conservatives of "tinkering and timidity" when what was needed was a dramatic lowering of basic rate income tax.
"What people need now, millions of ordinary British families who have been paying too much in tax for too long is a big tax break."
The Tory idea is interesting, but as they themselves obviously recognise, it is quite possible in practise that it will not have the intended consequence, so they have made the proposal so complicated that it will likely have no great effect, even if they could get it to work.
Meanwhile the Lib Dems are completely out of touch. For one thing, their proposal has been on the table for ages and seems to have nothing to do with the current economic crisis. For another thing, what you do not need in a recession / depression is a big income tax cut. People with jobs do perfectly well in an economic downturn. It is people who are unemployed who need the help, not people with jobs. What the government should be doing is increasing government expenditure on, say, transport, education and research and development. The country needs income tax cuts like a hole in the head.
It remains to be seen what proposal Labour comes up with, and of course that will be the only one that matters.
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