The Conservative manifesto, launched on Sunday, opted for a safety first approach to tax, pledging no increases in income tax, national insurance or VAT. Their plans mostly bake in the cuts to public services we’ve seen over the last decade, with only a few limited spending increases.
Almost as interesting as what’s in the document, is what didn’t make the cut. Pre-election promises to cut taxes on the wealthy and companies were dropped. Rumours about changes to inheritance tax and stamp duty also didn’t materialise.
This shows how the centre of gravity on tax and public spend is moving leftwards. The manifesto even promises to limit the “arbitrary tax advantages for the wealthiest in society”. Boris Johnson and his team clearly felt that it would be bad politics to go into an election promising lots of giveaways to the well off.
It’s true that the big tax pledge of increasing the national insurance threshold from £8,500 to £9,500 will mostly benefit better off families. But this change will still be sold as a broad, and limited, tax cut.
The Conservatives have promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised.
The manifesto also includes a number of welcome, but modest, measures to tackle tax avoidance and evasion. But unlike Labour, which is rethinking how to tax big global companies, the Conservatives have just reiterated their pledge to introduce a relatively modest tax on digital companies.
But with an ageing population, and growing pressure on public services, future governments are going to face huge pressure to spend more, and increase taxes to help support this. Given that most people haven’t had a pay rise in over a decade, any future tax rises should focus on those who best able to pay.