There are reports across the media of how the Chancellor is likely to hike taxes across a whole range of areas in order to fill the yawning £200 bn gap in the public finances.

There is talk of hitting bankers with windfall taxes, the same bankers that were told a couple of years ago how wonderful they were by Gordon Brown. There are rumours of attacks on public sector salaries above £150,000 per annum, the same public sector that New Labour has nurtured poured so much fertiliser on. Then there is the talk of raising VAT to 20% and even extending it to zero rated items such as newspapers and food, the same VAT that they reduced from 17.5% to 15%. There has also been speculation that property might be taxed more heavily, perhaps with the imposition of Capital Gains Tax on first homes. Then of course the easy targets of alcohol and tobacco, most expect these to be hit hard.

But these tax rises are not enough in themselves, they will also have to be coupled with stiff public sector cuts in order to be effective. Cuts that will affect jobs and pay across the board.

This comes on the same day that Hiscox, the insurance company, publishes a survey showing that the 2.5 million families that enjoy an annual income of over £100,000 still feel broke. But at the same time £200 million was spent in the London’s West End yesterday and over £400 million is expected to be spent online in one day today.

It seems that even in the face of an uncertain future in the form of taxes or even redundancy, we cannot get enough of the feel good factor while we can get it. With Christmas so close people still seem to be doing what they have done in the recent past, spend today and hope the bill can be paid next year.

All the noises coming from Labour is that they may delay all the taxes and cuts until 2011 for most of us and just hit the rich in the short term. Burt the bill will have to be paid in the end and any delay will make the final bill bigger.

The Tories will have promised a budget within 50 days of taking office so the bill might get to us earlier.

Tellingly, no-one is now calling the start of the upturn. The consensus seems to be that there is a lot of pain to come and that the current spending is out of kilter with the position we are in.

If the upturn was really round the corner there would be no need for talks of tax rises and public sector cuts, we would actually be talking about future Bank of England interest rate rises.

We are now fast moving from a tax and spend regime to a tax and cut regime, whichever party gets in. The only consistent factor is of course the tax.

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