Hello, this is Wilhelm. Today’s blog is in response to rumours that the government is looking to introduce a new tax on energy companies.
As we face a severe cost of living crisis, there is an answer staring the government in the face. In fact, it only requires Johnson, Sunak and their approval-ratings obsessed advisers to rediscover what it is to be a Conservative, and to be brave when the mainstream media mob attacks. You fly the kite against, not with, the wind.
The case for cutting taxes for both households and businesses is comprehensive. Even as the economy has suffered while the country is leaving lockdown, the Treasury has continued make record tax income, which is now 30% of GDP, greater than the 27% last year. The biggest cost of living for most people is their taxes. Do you want to help families and businesses facing expensive food and energy? Do the thing you are most empowered to do and cut taxes.
Instead of trying Labour-style policies, like a windfall tax on energy companies, strengthen the economy and encourage investments in the economy by giving business the confidence to expand without fear of being punished for making money. This terrible idea follows the raising of National Insurance payments. It comes as sin taxes are hurting working people by trying to control their behaviour. As the Spectator notes, an average family that indulges in drinking and tobacco will now spend £891 in cigarette levies and £216 in alcohol duty every year. No wonder there’s a cost of living crisis.
There is the old adage that cutting taxes actually increases tax income – because high taxes lead to less investment, reduced profits, and ultimately less tax intake. As Andrew Hunt of CapX recently wrote:
“With UK tax rates at 70-year highs, the Government has almost certainly travelled way past the peak of the Laffer Curve, which produces the double whammy of dampening economic growth and reducing the tax take. While the desire to pay down the Covid debt is commendable, doing so with measures that stifle economic activity is clearly counter-productive.
“As if the cost of living crisis weren’t enough, this is yet another reason for bold tax cuts and simplification: fortune favours the tax cutters.”