Tories must reclaim the low tax mantle

Alittle over a year ago, Labour was crowing over the untimely demise of Liz Truss’s premiership. The Conservatives had “crashed our economy” piling misery on working households, shadow chancellor Rachel Reeves told the Commons.

How times change. This is an election year, although the vote now seems more likely to be in the autumn than in May. And seeing how the public mood is turning, Labour wants to claim the mantle of being the party of prudent tax cuts. Sir Keir Starmer stated yesterday that if the economy grows, he wants to see lower taxes “in principle”.

This is thin gruel, but it may prove enough for many. Few voters believe that Labour is interested in shrinking the state; it is and always will be the party of the public sector. Labour is already planning tax increases, targeting families who scrimp and save to send their children to a private school.

Much of the low tax ground has been ceded, unbelievably, by the Conservatives, who have dragged the tax burden to its highest level since the 1940s. Years of tax rises and of “jam tomorrow” have left the party in a real bind, with polls showing Labour is now more trusted on taxation.

The good news for Rishi Sunak and his party is that Labour’s rightward shift opens up ground for the Conservatives. While Labour plan to spend billions on a “green prosperity plan”, the Tories could offer real prosperity and growth with bold tax cuts, without fearing accusations of fiscal irresponsibility from the Left. The Spring Budget is the time to act, so voters can see the impact before an autumn election. Promises are not enough.

Abolishing inheritance tax would be popular with a public which views it as economically damaging and morally unjust. It would lift a burden from ordinary families who have watched the value of their homes creep towards the threshold.

Similarly, it is time to raise the frozen income tax thresholds which have hammered millions of middle earners, dragging ever more of their incomes into the higher rate band.

A truly bold offering will require challenging the assumption that public spending can only go in one direction – up. The NHS, in particular, sucks in ever more money to seemingly deliver ever less.

An election fought on the basis of lowering taxes would be to the benefit of a public that has been pummelled by the state. For any promises to be credible, both parties must come clean about what it means for spending.