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.
Chief Executive, TaxPayers’ Alliance
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
Economic Adviser, Arbuthnot Banking Group
Professor Graeme Leach
Former Director General, British Chambers of Commerce
Deputy Director, Centre for Policy Studies
Chairman, IPEX Capital
Professor David Myddelton
Emeritus Professor of Finance and Accounting, Cranfield School of Management
Professor David B Smith
Beacon Economic Forecasting
Network for a Free Society