The UK is over taxed. The deficit has not been brought on by taxing too little, but by spending and wasting too much. Labour’s offence is not for setting tax rates that are too low, but wasting so much money on self promotion, poor purchasing, too much bureaucracy, political correctness – and above all on far too many people out of work and living on benefits. The total benefits bill is larger than the massive deficit, including huge spending on more than 5.5million people of working age without a job.
The taxes which are most damaging are the ones which tax saving and earning. We need to work harder, earn more, invest more. To do that the enterprise economy needs lower taxes on effort and success. We are not going to get the deficit down enough without getting many of the 5.5 million into work. We are not going to get it down without more tax revenue, and more tax revenue requires lower rates of tax to stimulate more income to tax, and more jobs to cut the benefits bill.
So I am wholeheartedly behind George Osborne when he recommends making a start with a lower Corporation Tax rate, with the possible abolition of IR 35 and other penal taxes on self employment, the reduction of Labour’s very high National Insurance, and his removal of non millionaires from Inheritance Tax. It’s the right direction for policy. I think we will need to do more to be sure of sufficient response from the enterprise economy to boost jobs and the revenues by enough.
Labour’s petulant and shrill attack on George Osborne for his latest tax cutting proposal has back fired. The more Labour complains about the tax cut, the more business lines up to support it. Labour suddenly realises they face fighting the leaders of the UK’s biggest companies, instead of fighting George alone. They realise that whilst they can brief unpleasant things about George they will not get away with that about the UK’s main bosses.They must be regretting the amount of publicity they have given this popular, sensible and modest Conservative proposal.
So why did they do it? How did the King of Spin make such a mistake? They did it because they know a tax cutting Conservative party will be much more popular than a Conservative party wedded to Labour’s uncompetitive tax regime, based as it is on jealousy and folly. They did it because they have always thought they can lambaste the man and by undermining him damage the policy. This time it hasn’t worked.
They should remember a previous time when George Osborne outwitted them by proposing a tax cut. In the early autumn of 2007 Gordon Brown was riding high. The polls said he go for an early election and win it. Those of us who were keeping the flame of lower taxes alive in the Conservative party had not been having a good time. George Osborne emerged at the Conservative party conference, with the Conservatives staring a fourth General Election defeat in the face, and announced a cut in Inheritance Tax.
It was electrifying. You could feel the whole Conservative party transform from gloom to hope. More importantly, outside the Conference Hall opinion changed dramatically. A tax was going to be cut. People were allowed to aspire again. If you were successful your worldly goods were not to be confiscated by the state. The Conservatives shot up in the polls. Labour back tracked, to pursue a longer personal vendetta against George Osborne.
That is why Labour ware so worried when Mr Osborne returns to tax cutting, and this time proposes cutting a tax that practically all working people have to pay. Tax cuts are lethal chemicals in Labour’s timbers. To the rest of us they are yeast, providing hope, rising spirits, the prospect of a better tomorrow.
The irony is that lower tax rates will help cut the deficit. They are the main way to restore some enterprise, some more manufacturing, some more private sector jobs to a dangerously lop sided economy. The media complaint to George Osborne should not be that he has offered too big a tax cut, but that he will need to offer bigger ones still if we are to recreate a successful enterprise economy in a hurry,. as we need to do.