Labour are wrong, wrong, wrong to oppose the Conservative policy of cutting National Insurance taxes. They put substantial extra tax into their budget deficit cutting plans for the next four years which will only materialise on the scale imagined if they cut tax rates on company and individual incomes. As I have often argued on this site, the way to increase the tax take is to cut the tax rate.
Labour’s case against George Osborne is that his NI cut is “unfunded”. Well, that’s a bit rich from the people who have brought us £167 billion of wasteful and unfunded expenditure this year, and are planning almost as much again next year.
The Tories are right that the UK is no longer tax competitive. That matters. If we do not change that soon, more businesses will leave, fewer will come here to set up in the first place, more UK entrepreneurs will go on strike. The Tories say they will cut Corporation Tax to 25%, cut small business tax to 20%, and take 1% off NI. The only worthwhile question to ask is “Is that enough?” Once a country gets a reputation for being uncompetitive, once it gets out that the government hates the private sector and clobbers enterprise, a new government may need to send a very strong message that things have changed.
Holland offers a lower Corporation Tax rate and a 36% top rate of income tax. The UK at 28% and 50% is way off the pace. There need to be more tax cuts for stronger growth, more tax cuts even to hit Labour’s targets for the amount of extra tax we will get in from growth. I want to tax the rich more. To do so we need a top rate of 40%, not 50%.