After a few weeks of campaigning, we finally know the policy platforms on which each of the major parties will stand in the upcoming general election. Both Labour and the Liberal Democrats have proposed a raft of tax hikes to 'fund' their new spending commitments. Labour's manifesto promised hikes in corporation tax, capital gains tax, increased income tax for those on £80,000 or more and a new 50p rate for those on over £123,000. The Lib Dems said they would increase income tax by 1p, put corporation tax back up to 20%, scrap the married couples' tax allowance and lower the level at which inheritance tax kicks in. The Conservative manifesto was less specific but stated a 'firm intention to reduce taxes'. This is welcome, although it falls short of the 2015 pledge to not hike income tax, national insurance and VAT. That leaves the door ajar for a renewed push to increase national insurance for those who are self-employed - but as we said at the time, the government should level down, not level up. And as we have said before, the sensible thing to do would be to put a lower cap on the overall tax burden.
There was also mention in the Conservative manifesto of simplifying taxes. Given ours is one of the most complicated tax systems in the world, this is a welcome, if vague, step forward. It must be followed through with meaningful reform, not tweaks at the edges - and we'll be making sure to remind politicians from all parties that our proposals in the Single Income Tax
offer the best guide to drastically simplify the tax code while easing the burden on taxpayers and business. A simpler, leaner, more efficient tax system would also help the economy to compete globally once we leave the European Union.
A decade after the great recession and 17 years since the last surplus, it is disappointing that the Conservative manifesto says that the books won't be balanced until 2025. The polls suggest that they will win a big majority and therefore form the next government, so if all goes to plan and they manage to stick to this latest pledge, Treasury red ink will have poured for a quarter of a century.
Perhaps this is unsurprising, as missing from all of the manifestos was any real action on wasteful spending and reducing the cost of government. Each manifesto promised new money, and the knee-jerk way to pay for these promises is largely through tax hikes. As I wrote in this piece for Conservative Home
, we still need to talk about spending.
Overall, it is vital that the TPA continues to fight for taxpayers - for better government, less wasteful spending and lower, simpler taxes. John O'Connell