Tax cuts would be disaster for country

IF Foreign Secretary Liz Truss becomes Prime Minister with a promise of tax cuts, as this is the wishes of Tory members and backbenchers who claim high taxes is why the UK’s economic growth has slowed, it would be a disaster for the country.

The burden of UK taxation, according to the Office for Budget Responsibility, is set to rise from 33% to 36% by 2026-27. The government planned to use this increase in three ways: to pay for some of the long-term consequences of Covid, improve public finances and pay for public services. Cutting tax would jeopardise these plans, and only increase household and corporate spending, which will end up causing the Bank of England to increase interest rates, already expected to rise to 11% by autumn.

Cutting taxes would mean less money going to support public services like the NHS, police and education. Yet, the ‘benefits’ of Brexit was supposed to make the UK economy the ‘Singapore of the West’ by being a low tax economy. Singapore doesn’t have a national health system but relies on a statutory insurance scheme called MediShield, and there is no government pension scheme either. Instead, Brexit has been a drag anchor on business and economic growth.

By keeping taxes at a higher rate means the government is collecting more money. Therefore, the government could easily help poor families with the higher tax take during the cost of living crisis by cutting VAT on fuel until the fuel crisis is over, and proportionally reducing the energy price cap for families on low income.

Cutting taxes will inevitably make the UK poorer and is not the magic bullet to boost economic performance, and in the current cost of living crisis would do more harm than good. It will also damage climate change commitments to reach net zero by 2050.

‘Hasta la vista baby,’ was the last words from Boris Johnson at PMQ’s taken from Arnold Schwarzenegger in the 1991 movie “Terminator 2: Judgment Day”. Will Liz Truss ‘terminate’ any hope of economic prosperity for the UK with her tax cut proposals if she becomes Prime Minister?

David Wood, Swansea