Can Boris Make Britain’s Economy Great Again?
Theresa May’s premiership resulted in three wasted years for this country. Not just because she failed to deliver Brexit, but because she expanded the size of government to an unprecedented level. The tax burden under this Conservative government has been at its highest since 1969-70. The Taxpayers’ Alliance discovered that in 2018, taxes accounted for 34.3 per cent of GDP, just under the 1969-70 figure of 35 per cent. The bottom 10 per cent of earners pay 49.5 per cent of their income tax. If the UK is to thrive once it finally leaves the EU without a deal, it needs a competitive tax regime to survive.
The Prime Minister’s proposal to cut the 40p higher rate of tax from £50,000 to £80,000 has come under fire. The Institute of Fiscal Studies’ analysis found that the plan would cost about £9 billion a year and predominantly benefit 10 per cent of Britain’s richest households. The Resolution Foundation also criticised the plans, as 83 per cent of those who would benefit would come from the top 10 percent of households by income. Labour typically used these arguments to justify their gender-based attack on Boris’s plans, saying that 80 per cent of those who would gain from the Tory leader’s proposed cuts would be men.
Boris rebuked these arguments by stating that his tax plans would generally benefit all households over time, not just the richest few. As The Guardian stated, without a majority in the House of Commons, it is unlikely the Conservatives will legislate their tax proposals. All the more reason that a general election is imminent soon.
The Daily Telegraph reported that the Prime Minister is ‘already having his ear bent’ on the case for a flat tax regime, which would replace the maddeningly complex ‘progressive’ tax system Britain has at present. The UK taxing regime consists of too many allowances, exemptions, different rates and thresholds. A flat tax would implement a single rate of tax payable on all income and capital gains above a certain level. There is certainly a credible case for a flat tax, but this argument has not been brought into mainstream politics yet, and until a politician is brave enough to support this proposal, this idea is unlikely to gain traction. For now, the Tories need to concentrate on simplifying the existing tax regime first.
Boris now has a golden opportunity to make Britain great again, and he can do that by reading the ‘Ten Point Plan for Boris’ that the Adam Smith Institute recently published, which would truly extend his tax cuts to the entire population. The plan includes cutting income tax by five percentage points and combining it with National Insurance, whilst taking living wage workers out of tax altogether.
Once the UK leaves the EU, this government has an opportunity to slash the red tape that Brussels has imposed on the country for years. The Commentator reported on a survey of 500 small-and-medium-sized businesses that found that the majority of them have no time to focus on growth. They also found that the EU’s health and safety paperwork was burdensome. The Adam Smith Institute has proposed slashing red tape by 25 per cent over five years. They discovered that this will provide businesses with an opportunity to invest once they have saved money from cutting red tape.
The RICS parliamentary and public affairs manager, Lewis Johnson, criticised Hammond for throwing £44 billion at Britain’s housing industry, saying that the plan will fail to deliver 300,000 new homes a year. The Adam Smith Institute argued that the government must implement a National Parks scheme to replace the outdated Green Belt in order to protect valuable green space whilst enabling developers to build on brownfield sites more. The Guardian discovered that Oxford City Council is struggling to build new homes because of Green Belt restrictions. The Ten Point Plan also includes a proposal to scrap Help to Buy, which according to property analysts Savills, caused house prices to soar by 21 percent during 2014-19 in the East of England.
According to the Adam Smith Institute, there are many other ways that Johnson can enable taxpayers to thrive. For example, cutting quangos which cost citizens £3.5 billion a year, uniting numerous taxes like stamp duty and council tax into a Land Value Tax, reducing tariffs post-Brexit, and ending expensive projects like HS2. For three years, Britain’s productivity was trampled by a May government intent on expanding the state’s size. The new Prime Minister has a chance to end three years of big government and to launch the UK’s potential. Let us hope he seizes on it.