Tag Archives: tax cuts

Right-wing Conservatives like Boris Johnson and Priti Patel are calling again for tax cuts to ‘free’ the economy.  It’s always popular to call for tax cuts, so long as you don’t link them to spending cuts; so it’s a priority for Liberal Democrats to link the two, and point out that the Brexiteers’ agenda is also one that shrinks the state further, and enforces continuing cuts in the NHS, social care, children’s services – the entire welfare state – education, bus services, even police and prisons.

And the Brexiteers have a problem.  They promised, of course, that they could spend £350m a week more on the NHS – a promise given by a campaign master-minded by Matthew Elliott, founder and first director of the Taxpayers Alliance, a lobby/think-tank dedicated to cutting state tax and spending.  He had used the same cynical ploy in leading the campaign against the Alternative Vote, arguing that the cost of the referendum and the new system could better have been spent on the NHS: knowing that this would appeal to hesitant voters, but not intending that any more money should be spent.  

Their problem is that the narrow majority that voted for Brexit were, and remain, deeply divided on public spending.  One of Lord Ashcroft’s latest polls, intended to inform the Conservative Party conference, warns that roughly half of those who still support Brexit support further cuts in spending and tax, while half – the less well-off, the ‘left behind’ and the ‘just about managing’ – want an end to austerity.  Pushing through Brexit, with a resulting fall in tax revenue on top of the corporate tax reductions right-wing think tanks are calling for, would force yet another squeeze on public services of all types – and would lose the Conservatives the working class support they think they have won.

Boris Johnson’s Conservative conference speech relied on the ‘Laffer Curve’ to square the circle: the assertion that cutting corporate taxes will increase revenue, as companies and their owners are freed to increase investment, create more jobs, and spur faster economic growth.  The record of successive Republican Administrations in the USA has shown that this does not work.  The second Bush Administration cut taxes without managing parallel cuts in spending, leaving the Clinton Administration to struggle with the accumulated deficit it inherited.

Behind this commitment to continuing cuts lies a deep antagonism to the public sector and to those who work in it, and an insistence that private provision always works better than public.  Teachers, they argue, are overpaid and underworked, civil self-interested and intrinsically inefficient bureaucrats.  But never a word from the libertarian lobby about rent-seeking executives in the private sector, or examples of corporate failure or corruption in the provision of services.  And it’s corporate taxes they want to cut deeply, more than personal taxation.