How best to deal with an economic crisis?

We're pretty much allowed to call the 'economic crisis' a recession now, I think - and certainly here in Oxford, signs of economic difficulties have been abundant for some months. I remember people back in the spring talking about the rising cost of living, and in many cases about how badly the abolition of the 10p Income Tax band had hit them - and now, among the signs of the economic slowdown, Oxford's BMW car plant seems to be announcing worse news every day about shutdowns and potential lay-offs (see http://www.oxfordmail.co.uk/news/yourtown/oxford/3957431.Third_closure_for_Mini_plant/).

So with everyone hard hit by rising prices, and in some cases the threat of job losses, the Lib Dems have been arguing for some time that the government should put money back in people's pockets - a cut in Income Tax would be a powerful way to achieve this, giving people the chance to spend or save our money as we see fit; and it could be at least partially paid for by closing tax loopholes for the super-rich. I do find the government's recent response - mainly based on temporarily reducing VAT - unconvincing; and I find Oxford City Council's Labour administration's plans to increase Council Tax next year by 5% almost inexplicable.

The Lib Dems have long been saying we should replace Council Tax altogether with a tax based on ability to pay. But even if Labour disagree with that, they won't get anyone's thanks for increasing the unfair Council Tax by more than the rate of inflation. Oxford City Council should be helping local families and businesses, not putting the boot in harder.