Tory MP calls for new spending squeeze to fund tax cuts
- Published on Monday, 02 December 2013 15:25
- Written by Daniel Mason
Dominic Raab MP calls for a strategic pledge to cut the overall tax burden in the 2015-20 Parliament, in 'Ease the Squeeze: tax cutting priorities in an age of austerity'.
"The elephant in the room is high levels of government spending and taxation hurting UK competitiveness and the squeezed middle, Raab said. "It's time to stop suffocating business, and give hard-pressed families more of their money back. The only honest way to do that is cut out more of the reckless state spending holding Britain back."
Raab calls for a manifesto pledge to:
- cut the overall tax burden
- not raise personal direct taxes
- introduce a 1–in-1 out rule for other taxes
The Government must also take steps to boost business and ease the squeeze now. Ahead of the forthcoming Autumn Statement, Raab also identifies government spending cuts of £17.6 billion to facilitate near term tax cuts which could be announced now while maintaining forecast deficit targets. He prioritises 'economic' tax cuts over 'political' tax cuts: cuts in national insurance, corporation tax and business rates, as these "are the measures most likely to generate the greatest economic growth." This includes:
- raising the employers' NICs threshold by £1,000
- freezing business rates, and exempting small businesses from business rates indefinitely
- merging national insurance and income tax by 2020
He also calls for steps that could be taken now and into the next Parliament to cut taxes for the lowest paid and middle-classes.
- cutting levies subsidising green technologies, saving £56 on the average annual energy bill;
- raising the entry threshold for employee NICs to £10,000 per year;
- cutting the basic and higher rates of income tax by one percentage point each (20% to 19% and 40% to 39%) - with a long-term aim to consolidate into two rates of 15% and 35%;
- committing to long-term indexation of the basic rate limit of income tax to inflation, and ruling out 'wealth taxes';
- indexing employee national insurance thresholds and limits to inflation through primary legislation;
- ruling out a new 'mansion tax';
- abolishing stamp duty for homes under £500,000 to support home-ownership, saving the average home-buyer around £7,500;
- indexing the remaining stamp duty thresholds to house price inflation through primary legislation.
Source: Centre for Policy Studies