UK Politics

Why tax is the trickiest issue of all for politicians

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When politicians talk about tax it makes headlines - even if they are not really saying anything. Let's play a little guessing game....

"I know that a lot of people believe the 40p rate now kicks in quite early, and quite a lot of people who don't see themselves as fundamentally very wealthy are paying that 40p tax rate. Now I'd love to be able to stand here and say we are going to sort all this out and raise the thresholds for all these tax rates, I can't make that promise today."

Who do you think said that?

The politician in question was talking about the level of salary at which people start paying 40p of income tax for every extra pound they earn. It is currently £41,865.

Perhaps this will help:

We should "start with tax cuts for the lowest paid".

Are you any the wiser?

Probably not.

It's a line that wouldn't be that surprising to hear any of the main party leaders at Westminster saying.

Let's stretch this game to breaking point. Here's a bit more:

"I think that should continue to be the priority, to try to make sure that if you work hard and do the right thing, I think that has to start with tax cuts for the lowest paid. I would love to make more promises, I understand the problem with the 40p rate kicking in while people are not earning a lot of money, but I have to look very carefully at the books before I can make any promises about it."

Let me end your no doubt intolerable suspense. Here are a few of the headlines the remarks provoked:

"Tories signal election promise to cut tax burden for 'middle earners'" said The Independent.

"David Cameron gave his clearest hint ...that he will stop more middle income workers from being dragged into the higher rate tax band" was The Times' take.

Welcome to the crowded and politically tricky territory of tax.

Tricky because it matters to people. Tricky because any change on tax sends a signal about a party's intentions, instincts and prejudices. And tricky too because whilst the economy's on the mend the public finances are still a mess - and so there is not much money about.

David Cameron was answering a question from a voter in Warrington in Cheshire, in a marginal seat.

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It was an exercise in leaving his options open: saying something, but saying nothing; recognising what some see as a problem, restating his priority is the poorly paid and acknowledging he doesn't have much money to play with.

So will it happen? Well, we don't know yet.

Let's unpack those three things that make tax politically tricky and look again at what the prime minister said.

1. Tax matters to people.

So: don't overpromise, don't say you can do something until you're sure you can.

2. Changes on tax send a signal.

So: be very careful in your language. Some of the write-ups talked about the 40p rate being an issue for "middle income workers".

And yet 4.6 million people pay higher rate tax out of 29.9 million income taxpayers. That is 15.4%.

The average annual wage, according to the Office for National Statistics, is £27,017. It's a bit higher for men, a bit lower for women.

The prime minister talked about people "who don't see themselves as fundamentally very wealthy."

3. And finally, there is not much money about.

The government is still spending more money each year than it earns, and so running a deficit and is expected to for another four years.

For every one of those four years, the national debt continues to go up, which makes justifying tax cuts rather tricky.

So, a concluding thought.

There are good reasons why politicians have to caveat and to hedge and sometimes can't give a straight answer.

But they are good reasons that leave the rest of us having to be get used to reading between the lines, as the speeches, questions and promises begin to flow in the countdown to the election.