The Daily Telegraph

Let the Left howl – but tax cuts are good even if the wealthy benefit

- JOHN REDWOOD FOLLOW John Redwood on Twitter @johnredwoo­d; READ MORE at telegraph.co.uk/opinion

The tax philosophy outlined by Liz Truss is great. Letting people keep more of the money they earn is a good idea, even if “progressiv­e” commentato­rs might complain that tax cuts can disproport­ionately benefit higher earners. We want to live in a world where most people can afford to buy the things they want and need out of their own income without recourse to the state, while government money is of course there for those who cannot work because they are ill or disabled or elderly.

The ultimate aim is for as many as possible to be self-reliant, with better incomes than the state can afford to give them. Much of the public agrees, which is why the Conservati­ve promise made in 2019 not to increase income tax, VAT or national insurance (NI) won support. It is still an important dividing line, with other parties keen to raise spending and taxes. We should stick to our word.

Keeping these broad taxes low is popular regardless of their “progressiv­e” status. Take NI. We know that most people working in the UK work in the private sector, and they know their income rests on working with their employer to deliver good service or great products which people will buy willingly. It is wrong to want to impose higher taxes on small businesses if they dare to employ people. Most employees understand that if their employer faces too large a tax bill, they will be unable to afford so many staff and will need to raise prices, which could lose them customers and orders. We will all be worse off.

All those who take risks and run businesses add to the flexibilit­y, choice and success of the British economy. They also offer job opportunit­ies for many. If we make it too difficult for them to operate, more of them will retire, look for an easier job elsewhere or decide they have to wind up their enterprise.

Unlike “progressiv­e” commentato­rs, most people are not jealous of those who earn more money through their efforts and skills. Football fans accept that the best players command huge salaries. Many of us are glad to see businesses succeed, rewarding those who had the vision and drive to set them up. We understand that, if there is no profit or bonus to be earned from success, the country will turn away more people who might otherwise come here to invest, and demotivate those here who could do well in commerce.

The alternativ­e vision is that of the Left, who want to live in a world where anyone setting up a business has to bear the losses if it does badly, but runs the risk of the state wanting to take more of the profits if it happens to do well. Load the dice too far and you have a much poorer society. Indeed, there was a time when this thinking succeeded – and along with their “progressiv­e” taxation came mass redundanci­es and lost investment.

The present cost of living crisis is of course hitting those on low incomes the hardest, but we cannot ignore the struggles of many on middle and higher incomes. Yes, benefit support should be targeted on those with the least, but tax cuts can ease the squeeze on a wider range of people. Where reduced taxes actually cut the cost of energy, there is a double win as the rate of inflation decreases and people across society get lower bills.

Wider tax cuts also foster a sense of aspiration and fairness. It is important to give the many who work hard and pay their own bills hope of a better tomorrow.

 ?? ??

Newspapers in English

Newspapers from United Kingdom