Taxes: are they bound to rise?

“Tax used to be the issue that would decide British general elections,” said Jeremy Warner in The Daily Telegraph. “Any party that stood for increased taxes would be doomed.” You might think that not much has changed as Labour “hurtles” into the polls on a foolhardy platform of “massive spending commitments funded by swingeing tax rises”; shadow chancellor John Mcdonnell has promised to shift the tax burden onto “the rich”, whom he defined as the 5% of taxpayers earning more than £70,000. Yet it looks increasingly likely the Conservatives are thinking of raising taxes too. Last week, Theresa May three times refused to rule out scrapping David Cameron’s “tax lock”: the promise not to raise income tax, national insurance or VAT. The tax lock, Chancellor Philip Hammond made clear, constrained “the ability of the Government to manage the economy flexibly”.

“It would be a terrible mistake for the Tories to fall into this trap,” said The Sunday Telegraph. “The Conservative Party is a low tax party, or it is nothing.” Whenever it has raised taxes – under John Major, for instance – it has stumbled. Hammond is concerned about balancing the country’s books. “But a good Tory ought to know that the optimum way to reduce the deficit is to cut spending – and cut taxes at the same time. Lower taxes generate higher growth and greater income.” This election is “a chance for Mrs May to sell voters on a Brexit plan involving more enterprise and a lower tax burden”, said The Wall Street Journal. It “would be a terrible thing to waste”.

This country has become incapable of thinking straight about tax, said Will Hutton in The Observer. The right-wing media casts taxation as “immoral, coercive” and “economically destructive”, and forgets that – as May said during her leadership campaign – it is “the price for living in a civilised society”. As a result, the system has become so distorted “that it threatens the social fabric”. After seven years of heavy cuts, public services have reached a tipping point. Prisons are in crisis; the NHS is under great stress; schools are suffering. I fear that politicians will duck the true challenges facing Britain, said Paul Johnson, director of the Institute of Fiscal Studies, in The Times. The deficit still stands around £50bn. The population is ageing, which means rising pension, health and care costs. The choice is this: we can maintain current levels of taxation, and accept poorer public services; or we can raise taxes – not just for high earners, as during recent years – but for “most of us”. Elections should be “moments for confronting difficult choices”. We need to be treated as “grown-up enough to make those choices”.