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Robert Halfon is MP for Harlow, a former Conservative Party Deputy Chairman, Chair of the Education Select Committee and President of Conservative Workers and Trade Unionists.

How is it something that is so central to the DNA of almost every Conservative – that was once our most potent electoral weapon – has become a stick with which we allow our opponents to beat us on a regular basis? How come something so incredibly popular in Conservative administrations past – is now seen by much of the public as only favouring the well off, at the expense of the poor? That ‘something’ is of course ‘tax cuts’.

Of course, there are a number of reasons for this sea change in opinion on taxation. It resulted partly from austerity and from the post-2010 Conservative coalition’s cut to corporation tax and the 50p rate.
These efforts to ‘Laffer’ – on the understanding that, after a certain point, increasing tax rates actually reduce tax revenue – were successful in boosting revenues and increasing investment. However, this success was, unfortunately, overshadowed by the political furore that erupted around the cut of the 50p rate to 45p. Not only did it detract attention away from the achievements of the tax cuts, but it drowned out any focus on the cuts to income tax for the lower paid.

The Government needs to make tax cuts ethical again. Tories must to convince the public that tax cuts mean more money in the pockets of hardworking individuals and families, and more funds available for essential services and the vulnerable as well. In order to persuade the public that tax cuts are ethical and do raise money for those in need, tax cuts cuts and increases to taxation are guided by – the following five frameworks.

First, much more emphasis should be placed on hypothecating different forms of taxation. In terms of health, the Government should introduce an NHS or Social Care Tax so that the public has a real understanding of how much of their money is being spent on healthcare. Petrol receipts should explain how much is being sent to HMRC – at the moment that figure stands at 60 percent of the total cost of petrol – and later spent on roads. We need to find a way to efficiently consult the public on funding for our vital public services. We should to find out how much of their hard-earned income they think should be spent on public services, on top of the real terms increases in place to keep the services on an even keel.

Second, social justice should be brought to the fore when looking at tax cuts. Tories must focus on boosting the lower paid and dealing with the cost of living. It is a lot easier to set out the moral case for tax cuts if it is made clear that the priority is to help those on the lowest incomes. So, identify and abolish unfair stealth taxes like fuel duty and the car parking charges at NHS hospitals in England. Lets use the Brexit dividend to cut VAT on energy bills.

Third, tax cuts must be centred on building our productivity and skills economy. This may mean reducing fees for students doing subjects that meet our country’s skills deficit, like healthcare or STEM subjects. We should make continued deductions to business tax too, to increase investment and employment.

Fourth, tax cuts must be redistributive. Conservative redistribution means that when the Laffer curve kicks in – and when more money is raised as a result of lowering taxes – we focus on bettering the position of the less well-off. We must use the extra revenues raised from cutting taxes for business and the well off to cut the taxes for the poor. This could be achieved by raising the tax threshold still further or by making more generalised changes to income tax for earners up to a certain level of their wages.

Fifth, we should increase tax specifically on luxury goods. The Government could come down much more heavily on goods like luxury cars and expensive jewellery. By increasing existing taxes or introducing additional taxes on such goods, funds would be raised for the Exchequer and the Conservatives would be seen to be introducing a fair and progressive tax policy. How much better is it to tax luxury cars to pay for environmental pollution, rather than taxing diesel drivers who brought their cars and vans in good faith?

With these tax frameworks in place, Tories could build on the success of ‘laffering’ and cut taxes, whilst also reinforcing the compassionate side to Conservatism in the eyes of the public.

It must be the role of Conservatives, to both demonstrate ethical reasons for a lower tax economy on the one side – in terms of philosophy and intellect, but to ensure that in terms of real policy, the lower tax message works in practice too. Unless Tories change how we think, speak and apply lower taxes, the Labour cry of ‘tax cuts for the rich’ will remain a powerful slogan.

So lets turn the tables: ‘Tax cuts for the many not the few’ is a powerful battle cry – a contrast to Corbyn’s Labour who don’t believe in tax cuts at all. A message that Conservatives are on the side of workers, their families and especialy the lower paid.

74 comments for: What should Tories tax? 2) Robert Halfon: We must focus on the lower-paid and the cost of living

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