Five year tax freeze? Pull the other one

A five year tax freeze is being promised by David Cameron should the Conservatives be voted in next week, and it's not just any old tax freeze – he's trying to convince us he's really serious by committing it into law.

However, the words are worth about as much as the paper his new 'law' will be written on.

While it may sound like a grand statement, the fact is this law could easily be suspended, rewritten, or taken out of the rule book altogether if times got tough again. If an act of god or a war broke out and the country needed more money then taxes would be hiked before 2020.

We've been here before. In 1999, the Conservatives promised a 'tax guarantee', offering the same thing and insisting it wouldn't 'fudge' this rule but then a year later the dotcom crash happened. And what was the party forced to do? You guessed it, raise taxes – saying that it had to look after the best interests of the country first.

This kind of hair-brained idea is the ultimate in gesture politics, amping up the rhetoric as the days to election count down but it does win votes. Who wants to pay more income tax, national insurance or VAT?

Empty words

Why Cameron may think the pledge makes him sound credible it begs the question, if you're so intent on keeping taxes down why the need to write it into law, surely you'd just keep taxes low. The fact you're offering up a change in the law means you can't have very much confidence in your own plans.

And if the rules are changed there is no come back against the politicians who will claim that the promise was made in different times and that what was offered then cannot be offered now. There are no sanctions or fines so writing something into law makes little different to the politicians.

The thing about democracy is we elect leaders to make decisions based on what they know at the time and to hopefully do the best with what information they have at a certain point. They cannot be crystal-ball gazers and we cannot expect them to be, which is why trying to determine policy for something as wide ranging as taxation for the next five years is a fool's errand.

Read more:
Five tax tricks to improve your wealth

10 ways to pay less tax

Politicians plus maths equals the wrong answer