Leading article: Time now for redistribution

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The Independent Online
THE New Labour Treasury's somewhat cavalier approach to the traditional pre-Budget purdah has been quite refreshing. In our interview with him today the Chancellor of the Exchequer says that he spends a lot of time thinking not just about international finance but also education, childcare, nurseries and employment. We can look forward with some confidence to an announcement of significant tax relief for childcare, with mothers in lower income households being helped with up to three-quarters of their childcare costs. The working families' tax credit should also help to eliminate disincentives to work that are built into the current tax and benefit system. That we already know the outlines of this reform will not make it any less exciting when it is formally revealed on Tuesday. It is fully in keeping with Gordon Brown's clear, unshakeable and altogether admirable belief that the best way to self-respect and economic opportunity is through work.

We have also heard tantalising hints that the Chancellor may finally have decided to tax child benefit. That would be welcome because it suggests that the Government can be cured of its aversion to increased tax and spending, and that it has not eliminated the word redistribution from its vocabulary. Dependency culture is not a monopoly of the workless: plenty of prosperous people cling to it too. Even before Jilly Cooper remarked that her child benefit provided her with an extra bottle of Sainsbury's champagne each week, it was apparent that much of the money allocated to child benefit goes to people who do not need it. We have argued consistently that, for higher-rate taxpayers at least, child benefit should be taxed and the spending targeted at those who need it most - not just in benefits, but in better education, health, public transport and social infrastructure.

But the case for redistribution clearly does not stop there. Nothing would better reveal that there is still clear water between Labour and the Tories than urgent action to stop the inventive devices which mean inheritance taxes are something the seriously rich never pay. The advice of Mr Geoffrey Robinson ought to have been particularly useful to the Chancellor in this matter. The proper application of inheritance tax law is not the politics of envy, though the Conservatives will no doubt claim it is. If a dynamic, entrepreneurial society is desirable, it makes little sense to give substantial numbers in each generation so much money that they are not compelled to work. That would have the added value of showing that this Government is capable of resisting the persuasive voices and cash contributions of rich capitalists. We believe the Chancellor is instinctively inclined to close these loopholes. He should act on his instincts. As Gordon Brown's role model, Lloyd George, said, the most convenient time to tax people is when they are dead.

We have to declare a particular interest in this Budget because of our own campaign to save the arts. As one way of plugging the gap created by the Treasury's determination to place the performing arts in a funding straitjacket, we have made the modest proposal that the tax authorities should make it easier for individuals to contribute to arts organisations. That would not solve their financial problems, by any means, but it might reduce the level of pain. We understand the Inland Revenue has told the Chancellor only of the difficulties our proposal would create. One is that any concession would have to apply to all charities, not just the arts. We would think it a thoroughly good thing if all charities were to find it easier to raise funds, especially as the Lottery - a notable new contributor to the Exchequer - makes fund-raising more difficult. The whisper in Whitehall is that Mr Brown will propitiate the arts by resisting museum entrance charges. That will be much better than nothing, but the arts still need saving.

We do not deny that Gordon Brown has a difficult task on Tuesday. He will be announcing impressive statistics concerning levels of borrowing and on the national finances, though an economic downturn later this year may make them look less well. Many among the audience in the House of Commons believe that justifies more spending across the board. Gordon Brown is right to avoid instant gratification. He is a man of substance, quite capable of fiscal prudence, while simultaneously advancing the cause of social justice. We wish him luck.

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