Cable dismisses tax cut calls as 'voodoo economics'
Thursday 28 July 2011
Business Secretary Vince Cable today dismissed calls for a tax cut to kick-start the stalled economy as "voodoo economics".
Mr Cable said calls by some Tories, including London Mayor Boris Johnson, to scrap the 50p top rate of tax would undermine the coalition's commitment to tackling the budget deficit.
Ministers have been under pressure over their handling of the economy after official figures this week showed growth had slowed almost to a standstill.
Chancellor George Osborne has hinted he would be prepared to cut some taxes to ensure the UK remained a competitive location for business.
However Mr Cable made clear any reduction would have to be fully funded by tax increases or spending cuts elsewhere.
"There is this expression which goes back to debates over the last 20, 30 years about so-called voodoo economics - this idea that you can cut taxes and nobody has to pay for it," he told BBC Radio 4's The World at One.
"The truth is if you do have a significant tax cut it is just like an increase in expenditure, it widens the budget deficit.
"The overriding task that this Government embarked on when it got into office was to sort out our public finances. We are doing that. It is difficult but we are doing it in a disciplined way.
"Aggregate tax cuts which are not funded completely undermine our commitment to budget discipline."
Mr Cable also slapped down a reported proposal by David Cameron's strategy director, Steve Hilton, for the abolition of maternity leave in order to ease the burden on business.
"That most definitely is not Government policy. Steve is a fine blue skies thinker but this is not part of what we are going to do," he said.
"We are looking at labour legislation in general but it has got to be sensible and balanced and I think that particular proposal isn't."
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