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Scott Mann is the Conservative MP for North Cornwall.

In a report published last week by the Institute for Public Policy Research (IPPR) and co-authored by the Archbishop of Canterbury, there is a suggestion that family gifts should be subject to a ‘lifetime gifts tax’. This would be a new tax, replacing existing the Inheritance Tax regime, which is unsurprising as the IPPR supports the concept of greater taxation, based upon a view that getting us to pay more tax will somehow make us better off.  The proposed individual ‘lifetime gift tax’ would kick in at £125,000.  This compares to the existing £450,000 combined nil rate and residence nil rate bands for Inheritance Tax, incidentally rising to £500,000 from April 2020.  So an individual who has worked hard all their life and wants to pass their assets onto their children would start paying tax at a substantially lower threshold.  How can this benefit middle and lower income earners?

The tax burden in the United Kingdom is already close to a 50-year high and the effect of this is exacerbated by the sluggish level of growth in the economy.  Economic growth needs to increase to reduce the drag anchor effect of taxation on individuals. This is something to which the Government has been – and rightly remains – committed: sustained economic expansion automatically generates greater tax revenues, which can then be directed to help those in the economy on the lowest incomes.

I agree entirely with the comment in the Report that there is “damaging wealth inequality” in areas of our society but simply putting up taxes risks compounding this same inequality.  The mantra of ‘taxing the rich to benefit the poor’ is an idyll that does not work in practice.  As research by the TaxPayers’ Alliance has shown, last year the bottom 10 per cent of households paid almost 50 per cent of their gross income in taxes.  Surely this suggests we need lower not higher overall taxes and highlights a burning injustice that needs to change?

What is clear to me is that ordinary people are already feeling the squeeze and the last thing they need at the moment is the prospect of paying still more tax.  I can say this with some certainty as both across the country in general and my North Cornwall constituency in particular, many family budgets are under considerable financial pressure.  The average household already pays £7,800 a year in direct taxes, before indirect taxes are taken into account. So the content of the IPPR report and the Archbishop’s intervention may seem like odd timing.  However, as the deadline for Brexit approaches, many people believe that the Treasury will have little option in the next Budget or two other than to increase certain taxes – perhaps alcohol and fuel duties, pensions tax relief or even an online retail tax –  so why would the IPPR not take advantage of the political mood and throw another new tax into the melting pot?

However, there is a whole host of existing taxes that could be cut, which would do more to help both middle and lower income earners.  For example, motorists are subject to fuel duty, road tax and Insurance Premium Tax, the effects of which are disproportionately higher on lower income drivers. Stamp Duty Land Tax can be a significant hurdle to first-time buyers. Those already carrying the tax burden are crying out for measures that address existing taxes and quite rightly expect their politicians to stop arguing about Brexit at the expense of everything else and to start listening to their very real concerns.

Constituents I talk to want to be able to earn a decent wage, to be able to afford buy everyday things, go on holiday to nice places and provide for their families both now and in the future. They accept an appropriate level of taxation is required to pay for essential services but they resent being lectured by those for whom taxation can never be high enough: whether they are politicians or policy wonks, those for whom raising existing and creating new taxes is a utopian outcome. In 1974 under Labour, the top rate of Income Tax was 83 per cent, rising to 98 per cent for those with income from investments: it is no surprise that two years later the United Kingdom was forced to go cap in hand to the International Monetary Fund for a financial bail-out.

Greater prosperity for the country benefits everyone.  A growing economy provides growing tax revenues, which reduces the need for any new taxes. Indeed, it offers the potential to cut taxes and put money back into people’s pockets, reducing the effect of the tax burden.  Surely this is a path we should be pursuing?

36 comments for: Scott Mann: No, Archbishop, new taxes aren’t the answer to our economic challenges

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