Cutting taxes is too simplistic a view

DURING the pandemic, the UK economy dropped the most compared to other developed countries and although it rose soon after, other countries in Europe are now going ahead of us.

The OECD predicts that we will be the worst performing of the top 20 nations in the world in 2023.

The Conservative candidates, and Liz Truss in particular, focused almost entirely on tax cuts. But we are not a heavily taxed country and have not been in that position since the 1960s, according to the Institute of Fiscal Studies.

They report that the UK tax revenue is below average, and their chart shows that 20 other countries in Europe raise proportionately more tax than we do. The only developed countries of lower tax than us are Australia, New Zealand, US and Ireland.

Even our corporation tax is low at 19 per cent, compared to Germany’s 29 per cent.

According to the OECD, our biggest problem is inflation. Our productivity as GDP per hour worked is also an issue.

Investment is linked indirectly to tax, but the Conservatives get it wrong when they take a simplistic view, because lowering taxes means more money in the control of big companies and already well-off individuals, who usually put themselves first.

It won’t be spent on future investment for productivity and employees.

Surely it is time to increase taxes on company profits which are not invested in the right way, and also on unearned wealth like capital gains.

This can then be used to improve public services, from which we all benefit, including private business, and hence, the economy.

Nigel Jones, by email