The next Prime Minister must cut taxes
BY CHLOE WESTLEY
The left talk about businesses as if they are always the bad guys – rich, powerful, elitist and greedy. In their eyes, any success or profit should be punished by higher taxation. You’ll often find the likes of John McDonnell accuse them of ‘not paying their fair share’. But there’s another side to that story. The shop owner who wakes up at 5am to open up early for customers, the hairdresser who works weekends and deals with payroll admin after closing up shop, the start up entrepreneur who hears ‘no’ over and over again but still keeps knocking on doors and exploring leads.
People who start businesses take a huge risk with their own money, and after finding a niche need in the market and establishing a viable product or service for that need, often go on to employ others in the community. Yet in return for this sacrifice and hard work, the government hammers – particularly small business owners – with higher taxes and bureaucracy that they can’t hope to keep up with.
Both candidates for future leadership of the Conservative Party have recognised the need to do something about the 50 year high tax burden, pledging to lower various businesses and income taxes. This is a welcoming change of direction for the Conservative Party, after years of proposals for interventionist, nanny state bans and taxes, and flirtations with increasing fuel duty and a digital services tax.
The next Prime Minister should challenge the anti-business rhetoric on the left, and instead champion the entrepreneurs and business leaders that generates the growth and revenue that funds public services.
Tax Cuts in America were a huge success. Workers got bonuses, pay-rises, companies have invested more in expansion – and the left really struggled to demonise this policy because whilst they were saying it was the end of the world, business employees were walking home with more money in their pockets and the success stories completely drowned out the naysayers. Australia cut income tax this year as well for 10 million working Australians. Britain’s friends and allies around the world are cutting taxes, there’s no reason why Brexit can’t be an opportunity for bolder policy.
And far from resulting in less revenue, tax cuts can often generate more revenue for the government, which means more money for public services. For example, corporation tax receipts increased by 25% in real terms when headline rates came down from 28 to 19%. And when the top rate of income tax was cut to 45%, receipts from income tax increased by 8% in real terms.
Of course, there must also be an ambition to simplify and modernise the tax system, so that it is fit for purpose in an increasingly global and digital age. The TaxPayers’ Alliance has long campaigned for tax simplification for this very purpose; an overly complex tax system means that larger businesses can afford a team of accountants to source loopholes, leaving SMEs at a disadvantage.
As Britain approaches its departure from the European Union, it’s more imperative than ever that this country aspires to be the best country in Europe to start and run a business.
Chloe Westley is Campaign Manager at the Taxpayers’ Alliance. Follow her on twitter: @LoveWestley