Five-year ‘tax lock’ is a step in the right direction
29 April 2015
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The IEA welcomes the commitment to lower taxes
Commenting on David Cameron’s announcement to introduce a five-year tax lock, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“Given the heavy tax burden faced by households, today’s pledge is a welcome relief. Lower taxes are good for growth, and will not only provide certainty for families but commit the next government to much needed spending restraint.
“But taxpayers should be aware of what this pledge doesn’t cover. There are already substantial increases in highly regressive duties pencilled in for the next Parliament as well as large increases in stamp duty revenues.
“A stronger pledge to protect taxpayers would be three-pronged. First, it would commit to not increasing the overall tax burden. This would allow tax reform, but with no overall increase in taxes. Second, it would pledge to not increase the rates of major taxes – as today’s announcement does. But importantly, it would also peg all tax thresholds to the higher of wage growth or inflation, to prevent stealthy tax increases as taxpayers are sucked into higher bands. The Conservatives have promised significant increases in the personal allowance and higher rate threshold, as well as linking National Insurance Contributions thresholds to prices, but politicians should go further to deliver this more widely across all taxes and bands.”
Notes to editors:
To arrange an interview please contact: Camilla Goodwin, Communications Officer 0207 799 8929 or 07821 971 443
For more on the subject of taxation, Taxing Problem: The UK’s Incoherent Tax System, by Ryan Bourne, can be downloaded here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“Given the heavy tax burden faced by households, today’s pledge is a welcome relief. Lower taxes are good for growth, and will not only provide certainty for families but commit the next government to much needed spending restraint.
“But taxpayers should be aware of what this pledge doesn’t cover. There are already substantial increases in highly regressive duties pencilled in for the next Parliament as well as large increases in stamp duty revenues.
“A stronger pledge to protect taxpayers would be three-pronged. First, it would commit to not increasing the overall tax burden. This would allow tax reform, but with no overall increase in taxes. Second, it would pledge to not increase the rates of major taxes – as today’s announcement does. But importantly, it would also peg all tax thresholds to the higher of wage growth or inflation, to prevent stealthy tax increases as taxpayers are sucked into higher bands. The Conservatives have promised significant increases in the personal allowance and higher rate threshold, as well as linking National Insurance Contributions thresholds to prices, but politicians should go further to deliver this more widely across all taxes and bands.”
Notes to editors:
To arrange an interview please contact: Camilla Goodwin, Communications Officer 0207 799 8929 or 07821 971 443
For more on the subject of taxation, Taxing Problem: The UK’s Incoherent Tax System, by Ryan Bourne, can be downloaded here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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