This article was written for the News & Star.
At some point this year a General Election is going to be called, and the country will go to the ballot box. As always, one of the key topics leading up to the vote will be tax – how much should we raise, who should pay, and what exactly should be taxed. Should we in fact even go further, and completely reform the tax system itself? The last point is something that I have long been interested in seeing happen as I believe our tax system has become increasingly overcomplicated and bureaucratic.
But whatever the positions taken, tax will indeed be a key election point. We need to tax income to pay for the services we as a society rely on – but right now we have the unsustainable position where we have the highest tax levels since the 1940s, in part caused by the costs incurred during the pandemic and the impact of the war in Ukraine. Recent announcements in the reduction of National Insurance, due to take effect at the end of this month, will begin to ease this burden – but there is more that needs to happen.
In my view, we need to reduce taxes further and leave more cash in peoples’ pockets so that it is they who decide what they want to do with their money, rather than the government. For this reason, I have signed a tax pledge – a commitment to vote against any net increases of taxes in the future.
We need only look across the border to Scotland, which is the highest tax-paying part of the UK to see what the alternative could be. Warnings about the impact of these tax increases on sectors like tech, where there is international competition for jobs, have fallen on deaf ears. For somewhere such as Carlisle this could have a positive impact. If you are doing the same job and are successful, it may be in your interest to pop over the border!
Before the election, there will be one more big fiscal event in Parliament – the Spring Budget 2024, which will be introduced to the House of Commons on the 6th March. This is where the Chancellor of the Exchequer will present his policies and revisions for the economy.
As our economy continues to improve with inflation falling, interest rate rises receding, and wages growing, I very much hope that the Chancellor will use the Budget to continue the direction of travel of another reduction in tax. I for one will want him to concentrate on reducing the tax burden on the lowest paid and not seek reductions in Inheritance Tax. This would benefit the greatest number and those most in need.
Aside from reducing the tax burden to working people, I do hope that the Chancellor is also thinking bravely and imaginatively. Our tax system as it is now is the result of tinkering and fiddling by various governments over the last few decades. As such, it is overcomplicated, difficult to understand, and sometimes unfair. Simplicity, transparency, and fairness are what makes any tax system work in the best way – so perhaps the best announcement in the Budget won’t just be a tax cut, but a tax change.