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Into battle on tax

Brian Taylor | 15:08 UK time, Tuesday, 25 November 2008

More on the Pre-Budget Report.

Understandably, it is turning into a substantial inter-party row - with sundry different elements.

Good thing too. Enforced consensus on the economy was becoming wearing. The scent of humbug, over-powering.

We've had the Westminster version. George Osborne had to be good - and, within limits, he was.

This was classic dog-whistle politics: tell (or rather yell) what your partisan side wants to hear.

The limits are less about the future choice confronting the voters than they are about what the Tories would have done to prevent the economic situation arising in the first place.

Would they, for example, have been more stringent in regulating the banks?

Then there's Vince Cable's alternative LibDem prospectus: building upon his party's predilection for cutting income tax rates.

(Doesn't quite square with Local Income Tax - but that's for another day.)

In Scotland, there's a toothsome battle, as ever, between Labour and the SNP.

Firstly, whisky. The industry is aggrieved that what was presented as a revenue neutral move is, apparently, nothing of the sort as far as they are affected.

See on this site. But their grievance is that the chancellor has cut VAT by x amount.

But he has, simultaneously, increased duty by x+y - as far as whisky is concerned because of the higher duty gearing faced by Scotland's national drink.

Further, the VAT cut is time-limited. It will expire at the end of 2009.

Do you imagine that, in January 2010, the Chancellor will then remove the additional duty which is intended to offset that VAT cut?

Yes, I thought that might be your answer.

More generally, public spending. John Swinney has been relatively emollient in addressing the budget, certainly by contrast with Mr Osborne.

Mr Swinney has backed the VAT cut - and the measures to assist business.

However, he has complained that longer-term efficiency savings in Whitehall could drive down spending in Scotland.

That's because the Barnett formula imposes cuts as well as comparable increases.

Expect more, much more, of that tomorrow when the Finance Secretary spells out his formal reaction in a statement to MSPs.

Also expect more, much more, of Labour's response.

Today, for example, Labour MP Anne McGuire said Mr Swinney was "in denial", ignoring the beneficial impact of the early phase tax cuts for Scotland - and the recapitalisation made available to Scotland's banks.

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