Earlier this week, the 8th of June marked ‘Tax Freedom Day’ – the point in the year when people get to keep the money they earn rather than sending it off to the tax man. Whilst this is something of a metaphor, given the way PAYE works, it really does highlight the level of the burden placed upon working people. Effectively, when including direct and indirect taxes, the average person spends 159 days of the year (or 43% of the time) earning money for the state. This is the highest level for many decades, and urgent action must be considered given the cost of living crisis we are currently facing.
Of course, governments require some tax to provide national infrastructure such as roads, as well as funding important sectors like education, justice, and defence. We also need to keep our streets safe through the police, run free and fair elections, and provide a safety net for the disadvantaged or those who find themselves facing real difficulty.
Indeed, we can also use tax as a tool to nudge people away from negative behaviour – such as polluting and smoking, as well as preventing big business monopolising markets.
However, it seems to me that any government, but especially a Conservative one, has a duty to keep overall tax levels low and to make work pay for everyone in our nation. We should encourage growth, innovation, and increased productivity by driving down taxes - for individuals and for businesses. We can encourage positive life choices, promote self-reliance and foster a vibrant economy.
This means reshaping our system - incentivising individuals to work and businesses to employ them. Key to this would be the scrapping of employers’ National Insurance contributions, which are effectively a tax on job creation. We also need to remember that ‘business’ is not some abstract concept that we can tax instead of people. The more we tax businesses through things like Corporation Tax, the more costs are passed on to owners, employees, and customers.
This is not a temporary solution or quick fix, but rather a guiding principle. I strongly believe that individuals, families, and yes businesses too, know how to spend their money better than any government. Everyone in society benefits when people are free to spend their own money – on their priorities – rather than feeding it into the bottomless pit that the inefficient state machinery sometimes feels like.