UK Think Tank Calls For Widespread Tax Cuts

by Jason Gorringe, Tax-News.com, London

18 October 2004

Chairman of the free market think tank the Centre for Policy Studies, Lord Blackwell, has accused Britain’s main political parties of being too negative on the issue of tax, and has put forward a moral and economic argument for bold tax cuts.

In a critique written for the CPS published last Friday, Blackwell, a Tory peer, suggests that politicians, in worrying about levels of public spending, are asking the wrong questions about tax.

“The right question is: ‘can we afford not to cut taxes?’” argues Blackwell.

“Polling evidence suggests that the electorate is beginning to recognise that big government tends to lead to waste and inefficiency rather than to a better society,” he noted.

Blackwell proposes the following five tax reforms in a bid to spur wealth creation:

• Income tax thresholds should be increased to £7,500 (currently £4,745), and transferable allowances between parents with children introduced to take the poor out of the tax net;
• The £5 billion lost from pension savings through the elimination of the dividend tax credit should be restored to boost the pension industry;
• Tax free ISA limits should be increased to £20,000;
• The abolition of inheritance tax to encourage generational transfer of wealth;
• The increase in employer National Insurance contributions reversed to encourage small business growth.

“The cost of these tax cuts would be about £30 billion - a sum which would be affordable if public spending grew by 0.5% less than growth in GDP,” claimed Blackwell.

“Given the huge growth in public spending in recent years, the argument should not be about whether we can afford to reduce taxes, but about how we discipline state spending to match the tax levels we can afford,” he concluded.

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