All the Tory leadership candidates apparently want to cut tax to some extent, either now or later. So far, however, the debate has not really got beyond the fairly simplistic issue of tax rates.
So are there candidates who have thought through and can elucidate a well thought out Conservative tax policy? To determine that we should look at indicators other than just rates.
Let’s take tax policy towards the self-employed. Increased self-employment is good for the economy, creating a much more flexible labour market. It’s good for productivity and good for business, providing companies with a flexible, multi-talented labour resource. It’s good for individuals, who appreciate working for themselves and having much more control over their own lives.
Increasing self-employment should be a cornerstone of Conservative policy, but tax policy is moving in the opposite direction, trying to shoehorn more people into an out-dated employee-employer PAYE relationship. New restrictive IR35 tax regulations means that it is increasingly difficult for freelancers to secure work from larger companies and organisations. Many are now being forced to work through umbrella companies which provide no benefit to them, only cost, including extra national insurance charges.
Moreover, from 2024 self-employed taxpayers will be required to assemble and send digital tax information to HMRC four times a year, in addition to preparing their self-assessment submission. This will be a massively time-consuming bureaucratic burden, particularly for those less confident with operating computer programmes. Add to all this the increased NI tax and the extra dividend tax, which will fall especially heavily on the self-employed who have incorporated, and it looks rather as if the Government has declared war on the self-employed.
This is because tax policy is being driven by bureaucrats with the aim of increasing tax revenues. That’s the job of HMRC bureaucrats, so perhaps one should not blame them, but our political leaders should take a wider, distinctly Conservative view.
Secondly, there is the issue of the global tax cartel, though which countries agree to surrender corporate tax policy and rates to a multi-national body. Surely we didn’t take back control from the EU just to surrender a chunk of it to an international cartel that includes a wide range of dictatorships, none of which will play fair in ether devising or implementing the rules?
The chances of the USA signing up to either component of the cartel arrangements are vanishingly small. Pillar one requires two thirds of the Senate to agree. Pillar two must be approved by both houses of Congress, one or both of which will be controlled by the anti-cartel Republicans by this autumn.
The cartel’s promoter, the OECD, keen for some real power at last, seems to think they can proceed without the US, but why would Britain want to go along with this? Signing up to the cartel was a bad idea in the first place, maybe agreed as some kind of genuflection to the geriatric but now doomed Biden administration. It should now be dropped pronto. Which of the candidates will speak out on this?
The broader, crucial question is this: which of them can set out a clear Conservative tax policy that promotes growth, promotes self-reliance and isn’t just about raising more revenue?
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