Robert Halfon is a former Apprenticeships and Skills Minister, is MP for Harlow, and is honorary President of Conservative Workers and Trade Unionists, Harlow MP and former Apprentice Minister.
I was asked by someone recently whether was I one of those Conservatives who advocates higher taxes in order to support public sector investment – given that I believed in the ‘Workers Party’ and support higher pay for public sector workers.
To their surprise, I said no – “Rather, I believe in higher revenues from tax ”. I added hat workers need lower taxes too.
This is not a contradiction in terms. For example, When Corporation Tax was cut, the tax take to the Treasury increased, according to the Financial Times, by 21 per cent. The IFS stated that Labour’s plans to hike the tax in the long term would actually lead to decreased revenues. It is no accident that employment has also correspondingly increased too.
Every time, there is a proposal to raise taxes, we need to ask a number of questions:
Will it bring in more revenue to the Government in the long-term?
Does it help or harm lower income workers?
Will the tax raise be highly regressive (such as increasing Fuel Duty: Nigel Lawson, please note)?
Will it have unintended impacts on many aspects of life e.g. fuel duty raises and the impact on food prices, business et al?
Does it change desired behaviours – i.e: the need to cut smoking?
Is it generally regarded by the public as something so morally reprehensible that taxes should be raised (such as big corporate tax evasion or certain non dom/offshore-activities)?
In other words, Conservatives need to reframe the whole tax argument in terms of raising revenues, redistribution, and emphasising tax cuts for those on lower incomes. If the argument is moved from tax hikes to revenues raised, it makes it much easier to explain to the public.
But, Tories need to be the party of redistribution too. So if we can prove that a tax cut for businesses has in fact led to an increase in revenues, we should put the proceeds in a special Redistribution Fund to spend either on public services, or on poorer communities, or cutting taxes for the lower paid.
In this way, the Conservatives would become the true party of redistribution: redistributing the extra revenues raised from cutting taxes for businesses, to those on lower incomes. The ‘Redistribution Fund’ would be fully transparent, and the public would know how much has been raised and how much spent each year. How much harder would it be for Labour for then to claim that we are cutting taxes for the rich when we would be spending revenues on the lower paid.
This is not just about changing language. It is using hard economic facts to help those on lower incomes and craft a narrative that the public can relate to: tax revenues representing a real ladder of opportunity. Conservatives should always be cautious of wishing for tax increases (with the provisos above), as a solution to the need for increased investment, but look at how we raise more revenues, and deal with some sacred cows… but that is for another day.