The TaxPayers' Alliance is correct

As so often, the TaxPayers’ Alliance has correctly analyzed what the government should be doing to redress the cost-of-living crisis. Instead of the Rishi Sunak largesse of handing out sacks of money that will ultimately have to be funded by taxpayers, he should, say the TPA, refrain from taking their money in the first place, but leaving it in their pockets instead.

The TPA’s three-point plan calls for the proposed income tax cut to be brought forward, the National Insurance increase to be scrapped, and for the green levies on energy bills to be abolished. It’s a bold initiative that would put into people’s pockets some of the money they would otherwise have to hand over to the Treasury. The government itself is a huge cause of the cost-of-living crisis. Its tax burden, the highest since the postwar Labour government of Clement Attlee, is not only making people poorer, it is also holding back the economic recovery the UK needs to make us all richer.

As John O’Connell, the TPA‘s Chief Executive puts it:

"Lower taxes boost the economy, letting people spend where they see fit. You can’t tax your way to higher growth, and you can’t spend your way out of an inflation crisis."

The UK Treasury seems to think otherwise, increasing taxes that will hold back growth when they should be promoting it, and responding to inflation by increasing spending. What the government should be doing is cutting spending by examining what each department does, and cutting back on the non-essentials and low priorities. If they cut spending, they can reduce the burden of taxation.

Chancellor Rishi Sunak is bidding for Gordon Brown’s title of a high tax, big spending Chancellor and, like Gordon Brown, has saddled the public with stealth taxes that many do not realize they are paying.

There is a mindset in the Treasury that thinks they can micro-manage the economy. They cannot, because the economy is not a thing that can be tweaked and twiddled to produce a sought-after outcome. It is a process, one that sees zillions on inputs interacting with each other, and producing an outcome that reflects the real world rather than some elegant model of it.

The TPA’s recommendations are ones that would set free more of the real-world economy to achieve more of the growth that the country badly needs. This is something the ASI supports and is making its own contributions towards.