Matthew Lesh, Head of Public Policy at free market think tank the Institute of Economic Affairs, commented on tax cut pledges made by Conservative leadership candidates
The UK economy is projected to stagnate in the coming years, while Brits are one-third poorer than Americans and one-fifth worse off compared to the Germans*. It's time for a radical new agenda that boosts the economy, shrinks the size of the state and returns money to people's pockets.
The UK, practically uniquely, is ratcheting up taxes on individuals and businesses just as the economy is struggling to recover from Covid and facing new challenges. This risks seriously damaging investment and longer-term growth prospects, ultimately meaning less prosperity or money for public services.
The next Conservative leader could change course by reversing the national insurance and corporate tax increases, unfreezing the income tax thresholds, abandoning the windfall tax, and bringing forward the cut in the basic rate of income tax. They could encourage investment by committing to extend the super-deduction, including allowing full expending of buildings, lowering corporate taxes over time and simplifying the tax system. This could be funded by reducing state spending to pre-pandemic levels and paying off debt over a longer period of time.
* Source: World Bank DataBank, GDP per capita, PPP (current international $), 2021
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