The 45p tax

Some, even moderate, Tories are annoyed at George Osborne's unwillingness to rule out the income tax hike on those earning more than £150,000, when and if the Tories come to power.

What do they expect?

The finances will be so much in the red that there is no way that slashing expenditure will be enough, soon enough, without causing mayhem. The next government will need to save something like £100 billion a year, and if they save less than the debt will mount by the interest that has to be met. In other words, abolish NHS spending or alternatively get rid of the army, navy and air force three times over. This is the order of savings to be made.

It is to be hoped that something approaching perhaps half that figure could be saved by cancelling ID cards and other wasteful projects, abolishing many quangos and increasing efficiency in all government departments, and perhaps by a freezing of all civil service vacancies, but this will all take time, as will getting people off benefit and back to work.

In the short run there seems little alternative to raising taxes, even if relatively briefly. The savings, and possible reductions in taxes, will come when upturn is well on the way and incomes are higher and taxes collected are higher. Raising tax on the very well paid may not be popular, but there are arguably more deserving cases at the bottom end. It is a national disgrace that people working at the national minimum level should have to pay about 10% of their income in income tax.

It is never easy to tax highly paid staff, because with their skills and experience they can very easily decamp overseas, but this is the quandary which Brown and his debt financed boom has landed us in.