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Letter to the Telegraph: Our tax is too high

    Daniel Mahoney, Deputy Director and Head of Economic Research at the Centre for Policy Studies, added his name to a letter calling for lower taxes.

     

    SIR – The Prime Minister and the Chancellor can insist that theirs is a party of lower taxes all they like; the numbers don’t lie.

    This year the tax burden, measured as a percentage of GDP, will be higher than in any year under the last Labour government. There have been increases to the personal allowance and cuts to corporation tax, but increases in VAT, stamp duty and capital gains tax have more than offset these. At least five new taxes have been imposed on politically expedient targets such as businesses, banks and soft drinks. This marks an unwelcome departure from Nigel Lawson’s aim of abolishing a tax at every Budget.

    The tax lock on income tax, National Insurance and VAT has not been conducive to good policy making, but has encouraged ministers to devise ever-more convoluted and economically incoherent ways of increasing revenue. The almost incomprehensible reforms to tax relief on pension contributions are a case in point.

    It would be better to replace the existing tax lock with a commitment to keep the tax burden below a third of GDP. If this is exceeded in a given year, it should mean lower borrowing rather than more spending, and a commitment to fresh tax cuts to bring the burden back under target at the next budget.

    John O’Connell
    Chief Executive, TaxPayers’ Alliance
    James Bartholomew 
    Author, The Welfare of Nations
    Professor David Blake
    Cass Business School
    Professor Philip Booth
    Professor of Finance, Public Policy and Ethics, St Mary’s University
    Dr Eamonn Butler
    Director, Adam Smith Institute
    Professor Kevin Dowd 
    Professor of Finance and Economics, Durham University
    Ruth Lea
    Economic Adviser, Arbuthnot Banking Group
    Professor Graeme Leach
    CEO, Macronomics
    John Longworth 
    Former Director General, British Chambers of Commerce
    Daniel Mahoney
    Deputy Director, Centre for Policy Studies
    Jon Moynihan
    Chairman, IPEX Capital
    Professor David Myddelton 
    Emeritus Professor of Finance and Accounting, Cranfield School of Management
    Professor David B Smith 
    Beacon Economic Forecasting
    Linda Whetstone 
    Network for a Free Society

    Date added: Wednesday 10th May 2017