George….it’s time to embrace cutting income tax and slashing spending.  That’s a vote winner and it will bring us out of recession a damn sight quicker!

Cutting taxation.

A natural Conservative heartfelt belief.

It’s at our core.

And I hope we start saying it in the election campaign…..but I feel we wont because the Party will fear the attacks from Labour.

The mentality of Brown’s Government is that to raise more revenue it is essential to raise taxation: both in corporation tax and personal tax.  Hence why we saw the rise in personal taxation to 50p on earners above £150,000, (political ‘class war’ issues also played a hand to appease Labour’s traditional hard core vote).

What’s the result of the 50p tax……?  …….higher taxes are yielding LESS revenue as individuals are either using clever accountancy to avoid taxes, they are spending less or some even relocating from the UK, (the infamous Brain Drain).  The rich have less incentive to earn more, and more incentive to dodge tax.

As the Governor of the Bank of England has recognised.  Britain, with the low value of the pound, should be an extremely attractive place to set up business and be a haven for entrepreneurs.  It is also a great time to start, if you have money, to buy and invest in housing and shares as they have hit pretty much rock bottom — pending any seismic future shocks.

So to attract more business and investment to the UK, help turn the tide and bring the economy out of this damaging recession, now is the time that the Government should change tact and CUT TAX IMMEDIATELY. 

Firstly, to cut corporation tax.  Let’s stimulate our business to re-invest and take risks.  Let’s attract more business from abroad, who will of course invest, create much needed jobs, generate more revenue for the exchequer and importantly add to a growing sense of confidence in the business community.  This is surely better to stimulate the ‘engine’ of the economy than build up huge debts and pump money to prop up the economy and create thousands of jobs in the public sector.

Yes, confidence is the key word.  Imagine, a cut in personal taxation today.  It sends a bold message out, injects more money into people’s pockets, which as the slight uplift in retail sales shows, will be followed through into retail spending.  People need confidence and the tax system can be used to stimulate—prod—spur on confidence.  People need that fire lit under them.

This bold move is one that has been achieved in the past.  JFK boldly showed this theory is sound in 1960 and the Irish have clearly demonstrated this with lower corporation tax:  less tax means greater yields.  

And of course we can point to the Thatcher era when low taxes led to increased investment, greater confidence and rising exchequer revenue.  When Chancellor Nigel Lawson cut the top rate of income tax to 40% he unleashed unparalleled wealth creation and the government benefited from taking a smaller piece of a far larger pie. 

But Socialists and Lib Dems disagree vehemently with this and need proof.  Hence hopefully they will learn a lot from the table below taken from official HM Treasury statistics.

Just consider that the richest 1% currently pay 23% of all tax revenues collected.  The richest 5% pay 42% of the tax collected.  Only 11.5% comes from the bottom 50%.  Where should the Government concentrate it’s efforts to stimulate the economy and gain more tax revenue?  It does not take a huge brain to work that out!

“Share of total income liability” is available for selected years.  Expressed as a percentage

Note: from 1999, people taxed as individuals not families

The time has come for the British psyche to realise that the phrase ‘cutting taxes’ does not mean falling exchequer revenues….it means, when done properly, INCREASED exchequer revenues.   Increased revenues means less government debt, it means more employment for all….and guess what….a rise in the general living standards of all.

Let’s hear George Osbourne grab this mantle and if elected, demonstrate these principles in his first budget.

Chancellor Lawson:  He got it…and demonstrated it.  Lower tax = more revenue