Do we need to raise taxes?
On this morning's Today programme David Cameron refused to rule out tax rises to restore the nation's public finances. Speaking at 8.35am BBC Political Editor Nick Robinson suggested it was only a matter of 'when' the Tories would be considering tax increases. Last week a former adviser to George Osborne recommended higher taxes. Yesterday, ConservativeHome asked some prominent centre right commentators to answer the question: 'Do we need to raise taxes?' These are four 'no' answers.
Oliver March Hartwich, Chief Economist of Policy Exchange:
"There can be no doubt about it: The economic prospects for Britain do not look rosy. Nor are the forecasts for the public finances any better. For the time that a new Conservative government may be elected, in 2010, economists forecast a budget deficit between £95bn and £150bn - or 6 to 9% of GDP. Deficits of such proportions are not sustainable beyond a very short period of time without causing considerable damage, so a new government should make reducing the deficit its first priority. But does this mean raising taxes? Not necessarily. The alternative is to curb public spending. That's why all big government projects (e.g. the costly ID card scheme or other big IT projects) should be put on hold. While this would not endanger public service delivery, it would nevertheless help the consolidation of the state's finances. Cutting such spending is the better alternative to increasing the tax burden in economically difficult times."
Matthew Elliott, Chief Executive of The TaxPayers' Alliance:
"Winston Churchill is not often quoted in economic debates, but one of his pearls of wisdom is very apt for the current economic circumstances. Churchill likened raising taxes to generate prosperity to standing in a bucket and trying to lift yourself up. If a new Conservative government tries this approach to plug the deficit, it will be similarly futile. Instead, the Party should be looking to cut spending to generate the funds to either cut the deficit or, even better, cut taxes. For example, scrapping Regional Development Agencies would save £2.3 billion. Freezing civil service recruitment as Margaret Thatcher did in 1979 and Oliver Letwin proposed at the last election would, after ten years, save £3.3 billion a year. Just think what cutting civil service numbers would save. When Ronald Reagan was elected President, he appointed the Grace Commission to root out wasteful Federal Spending. By the 1990s, it had saved the US taxpayer $10 trillion. Boris Johnson has appoint Patience Wheatcroft to root out waste, and is now freezing the GLA precept. The first announcement of a Conservative Treasury should be the appointment of a Waste Tsar to go through Gordon Brown's dodgy books with a fine toothcomb. Then they will find the money to plug the deficit (and, hopefully, cut taxes) without imposing extra burdens on already over-stretched households."
John Glen, Former Director of the Conservative Research Department:
"If we win the next election we will inherit an unprecedented amount of debt and a level of Government spending that is unsustainable and undesirable. This is money that should have been put aside for a rainy day in the good times not wasted on Mr. Brown's Big Government. Twenty months out from the election it is impossible to outline detailed tax plans when we don't know the state of the books at the point we assume Government. Our position now needs to reflect the reality but not lose connection with our deep instincts; the hard-pressed taxpayer has had enough and a Conservative Government should decide to spend less of his money so it can pay off Mr. Brown's debts and give the taxpayer a load back as soon as possible. We need to cut expenditure before we start taking more from families. This needs to be rigorous and involve tough choices to be credible. Tax rises now should not be on the agenda."
Jill Kirby, Director of the Centre for Policy Studies:
"No. The priorities for an incoming government with a massive debt hangover will be cutting out whole areas of unproductive government activity and putting in place the conditions to stimulate growth in the productive economy, generating resources to pay off debt. That could entail tax cuts - but those cuts must be directed to incentivise work, so that, for example, inheritance tax cuts might have to wait. Reforming tax credits to create better work incentives, and cutting corporation tax for small businesses, might be two examples of the tax stimulus Britain will need to get back up off the floor."