Rishi Sunak has his priorities right
In an exclusive interview with this newspaper, Rishi Sunak, the Chancellor for just three weeks, gives an encouraging sense of his priorities: fiscal responsibility, “levelling up” infrastructure and, crucially, a lower tax regime. “Having a lower tax, simpler, fairer, flatter tax system is something that can drive growth,” he explains – adding, in words that are refreshing to hear, that he also thinks it’s a good thing that people get to keep more of their own money. This is the case for conservative economics that we have not had nearly enough of since Margaret Thatcher. Low taxes do, as Mr Sunak says, drive growth, but they are also a moral good, because they give people the material necessary to run their own lives, invest, build businesses and help others.
Tax can also play a significant role in how Britain copes with the coronavirus, which might hit perfectly good businesses with a dramatic fall in customers or orders. Mr Sunak suggests an expansion of the Time to Pay initiative, which allows firms to spread their tax payments over months or years. This would be an excellent idea – as would a radical overhaul of the business rates system. The Chancellor also hints at an increase in the discount that small retail businesses pay.
The Government’s approach thus far to the outbreak has been proportionate and calm. This is potentially a very serious epidemic. The current strategy, which is to seek to delay and dampen the spread of the disease, is correct. It’s vital not to generate a panic, because that could do just as much damage to the economy as the sickness itself.
Hence the reason why this Budget cannot be business as usual: it will be a manifesto Budget and a coronavirus Budget. The Government also needs to work out exactly how it can reconcile its commitment to higher spending in some areas with the desirability and necessity to keep taxes low. We must hope that it has jettisoned almost all the bad, tax-rising ideas floated in the past few weeks, even if one or two regrettably make their way into the red box. None the less, it is extremely encouraging that the new Chancellor understands the economic and moral case for a long-term low tax strategy.