John O'Connell of the Taxpayers' Alliance, pictured, argues today that the Chancellor's announcement yesterday was not that of a low-tax Conservative
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Tory backbenchers greeted Rishi Sunak’s statement in the Commons yesterday with thunderous applause, as the Chancellor announced a raft of generous handouts.

Labour seemed blindsided by his generosity, reduced to demanding ‘What took you so long?’ as Mr Sunak announced eye-popping giveaways to poor and middle-class families alike.

Sunak calls himself a ‘low-tax Conservative’. But there was nothing low-tax, and precious little economically conservative, about these measures. Windfall taxes – however popular they may be with voters – are straight out of the Left-wing playbook, even if it’s true that Sunak is not the first Tory chancellor to have imposed one.

Low, simple and predictable taxes stimulate growth. This has been shown again and again. It has been deeply dispiriting to witness an ostensibly Tory Government so often rejecting fiscal rectitude and low taxation, and instead turning Britain into the high-tax, high-spending economy it has become.

John O'Connell of the Taxpayers' Alliance, pictured, argues today that the Chancellor's announcement yesterday was not that of a low-tax Conservative

John O’Connell of the Taxpayers’ Alliance, pictured, argues today that the Chancellor’s announcement yesterday was not that of a low-tax Conservative

Tory backbenchers greeted Rishi Sunak’s statement in the Commons yesterday with thunderous applause, as the Chancellor announced a raft of generous handouts

Tory backbenchers greeted Rishi Sunak’s statement in the Commons yesterday with thunderous applause, as the Chancellor announced a raft of generous handouts

Sunak calls himself a ‘low-tax Conservative’. But there was nothing low-tax, and precious little economically conservative, about these measures. Windfall taxes – however popular they may be with voters – are straight out of the Left-wing playbook, even if it’s true that Sunak is not the first Tory chancellor to have imposed one

Sunak calls himself a ‘low-tax Conservative’. But there was nothing low-tax, and precious little economically conservative, about these measures. Windfall taxes – however popular they may be with voters – are straight out of the Left-wing playbook, even if it’s true that Sunak is not the first Tory chancellor to have imposed one

As we at the TaxPayers’ Alliance have warned, Britain is labouring under the highest tax burden since the Second World War and Clement Attlee’s socialist administration.

With family budgets already strained, soaring prices become an acute problem. It is right that the Government has stepped in to support the poorest families at a time of genuine crisis – but this short-term measure must be complemented by bold long-term reform. The tax burden has to come down.

National insurance – a tax on work – has been hiked, ostensibly to pay to reduce NHS waiting lists and then for social care.

Corporation tax is soaring from 18 to 25 per cent – reducing Britain’s international competitiveness. Income tax thresholds have been frozen, potentially dragging millions into swingeingly high tax brackets – a problem worsened at a time of rampant inflation and corresponding increases in salaries.

What is the point of ‘robbing Peter’ by hiking our taxes – and then ‘paying Paul’ by giving us a modest rebate on our energy bills?

The Chancellor has promised to take a penny off the basic rate of income tax as a transparent bribe before the next election. But that money – and that tax cut – would be far better deployed now.

Of course governments need to respond to changing circumstances. And both inflation and rising energy bills are global problems.

But endless bailouts and handouts are not the answer. A shifting terrain of tax rises makes it impossible for households and businesses to budget effectively. Spending, wages and investment all suffer as a result.

Corporation tax is soaring from 18 to 25 per cent – reducing Britain’s international competitiveness. Income tax thresholds have been frozen, potentially dragging millions into swingeingly high tax brackets – a problem worsened at a time of rampant inflation and corresponding increases in salaries

Corporation tax is soaring from 18 to 25 per cent – reducing Britain’s international competitiveness. Income tax thresholds have been frozen, potentially dragging millions into swingeingly high tax brackets – a problem worsened at a time of rampant inflation and corresponding increases in salaries

Historically, the best Chancellors –Tory and Labour – have trusted individuals to make their own decisions about how to spend their money. They have remembered that the primary purpose of government is not to throw money at every problem, but let taxpayers make decisions for themselves and their families.

Lower taxes boost the economy, letting people spend where they see fit. You can’t tax your way to higher growth, and you can’t spend your way out of an inflation crisis.

Had the Government remembered these basic economic lessons – especially since the gargantuan splashing of public cash during the pandemic – many people’s finances would feel a lot less precarious than they currently do.

So what should Mr Sunak be doing? To start with, he should be cutting income tax now – not in a couple of years. Doubling the promised 1p cut to 2p – and doubling it now – would cost the taxman £10 billion. However, over ten years, the country would get far more back.

By our calculations, GDP would be £19 billion higher (about 0.6 per cent). Investment would be 1.4 per cent or £4 billion higher over ten years. Average earnings would rise too – up £4 a week over ten years. We would all be better off.

Or the Chancellor could be bold and take the ‘low-tax Conservative’ option by slashing the basic rate by 5p to 15 per cent.

So what should Mr Sunak be doing? To start with, he should be cutting income tax now – not in a couple of years. Doubling the promised 1p cut to 2p – and doubling it now – would cost the taxman £10 billion. However, over ten years, the country would get far more back

So what should Mr Sunak be doing? To start with, he should be cutting income tax now – not in a couple of years. Doubling the promised 1p cut to 2p – and doubling it now – would cost the taxman £10 billion. However, over ten years, the country would get far more back

This would cost £25 billion – enough to raise eyebrows in Whitehall. But over ten years, GDP would rise by a massive 1.5 per cent – that’s an extra £49 billion. Investment would rise above 3.5 per cent or £10 billion higher, and average weekly earnings would be up by £11. (Over a year, that’s £572 – more than a £400 grant on your energy bill.)

Where would the money come from? Well, there are huge savings to be made across government. Why not cut the foreign aid budget back to just essential humanitarian work, saving over £15 billion?

In addition, why not match the annual leave of public-sector workers with those of the private sector – at 25 days plus bank holidays? This would save a further £3.1 billion a year. Ending public-sector pay-bargaining could also save £1.8 billion in 2021-22, rising to £10.3 billion by 2025-26.

And that’s before we even get to the billions in Whitehall waste, which the Chancellor is right to say he’s keen to tackle.

Yesterday, Rishi Sunak told the Commons: ‘I trust the British people and I know they understand no government can solve every problem, particularly the complex and global challenge of inflation. But this government will never stop trying to help people, to fix problems where we can.’

He needs to start living by that maxim – and giving taxpayers the power to protect their own economic wellbeing by keeping more of their money.

And he needs to do it quickly.

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