Davis leads Tory revolt over Rishi’s ‘recovery taxes’
DAVID DAVIS today leads a Tory charge to stop Rishi Sunak unveiling a tax- raising Budget next month that could kill off Britain’s post-pandemic recovery.
The former Brexit Secretary gives notice that he would not vote for such a package, insisting this was no time for ‘damaging tax increases’.
Instead, he urges the Chancellor to forget trying to balance the nation’s books now and do all he can to help British business recover from the pandemic.
He declares: ‘Growth must be the clear aim of our economic strategy for the next two years – not spreadsheet conservatism.’
The clarion call will chime with the private views of many Tory MPs anxious that Mr Sunak will use his Budget on March 3 to raise taxes to start clawing back l aw back some of t he almost £ 400 billion of Government borrowing.
It may also provide them with cover to raise their concerns publicly after Tory Chief Whip Mark Spencer last month sought to head off any Tory Budget rebellion, warning that a vote against the Finance Bill would be seen as a vote of no confidence in the Prime Minister. Treasury officials are already said to be poring over plans to increase capital gains tax and freeze personal income tax allowances.
Tory backbenchers also fear that he will raise the 57.95pa-litre tax on fuel.
But in an article for The Mail on Sunday today, Mr Davis blasts the Treasury for even floating the possibility of the tax rises.
He writes: ‘ The mutterings that keep emerging from the Treasury about increasing taxes to balance the books are economically incomprehensible.
‘Such action would not only be wrong, it would be completely counterproductive.’
Mr Davis also challenges the Chancellor to respect the 2019 Election manifesto promising not to increase the rates of income tax, National Insurance or VAT. He says: ‘I will not break the spirit or the letter of that promise and neither should the Chancellor.’
Mr Davis, acknowledges that Government borrowing this year is set to be a ‘colossal £394 billion’. However, he insists there is ‘no way’ Mr Sunak can balance the costs of Covid in the short term, describing the debt levels as ‘wartime figures’
He adds: ‘Britain did not try to pay for the costs of the war straight away. Quite properly we took 50 to 100 years to pay off those war loans.’
Mr Davis also points out that the UK tax burden is already at 50-year high and raising it further now would be ‘ to forget our party’s roots’.
Declaring now is ‘not the time to stifle productivity with damaging tax increases’, he says: ‘ I certainly would not vote to approve a Budget that increased the tax burden above its already high level.’ Next month’s Budget will come with Mr Sunak, 40, still riding high in the Tory popularity stakes and with many predicting he is the man to succeed Boris Johnson.
However, in a hint that the young Chancellor’s biggest challenges are yet to come, Mr Davis, 72, urges him to stand up to his Treasury officials as former Tory Chancellor Nigel Lawson would have done and face down their demands to find ways of repaying our enormous Covid debts in the short term.
He also appeals to Mr Sunak to ‘take his lead’ from former US president Ronald Reagan who defied ‘conventional economists’ by slashing income tax rates and revitalising the American economy in the 1980s.
‘ Reaganomics was heavily criticised by conventional economists, but it led to a growth in GDP, a resurgence of business confidence, and a fall in unemployment rates,’ he writes.
‘We need to repeat that feat today.’
His intervention comes as Labour leader Sir Keir Starmer also said tax rises should not be put in place now and unveiled plans for a student loan- style system to allow firms to pay down debt only when profits returned.