There’s been an endless back-and-forth in the media. Will he cut taxes? Which taxes will he cut? Who would benefit?
But it’s a sideshow. The Tories are dangling tax cuts in front of us, trying to distract us from the main event.
Don’t be distracted
The public realm is crumbling. Our NHS and services are falling apart after fifteen years of mismanagement and budget cuts. And they have no plan.
The proposed tax cuts are a last ditch attempt to distract and to win a few more votes before the looming election.
It’s a desperate cut and run attempt by the government, as our executive director Robert Palmer said on LBC News this week.
But the UK public are smarter than that. We all know what a perilous state our country is in – and that tax cuts won’t fix it.
The vast majority of people (74%) prioritise keeping taxes the same, or raising them, if it means better public services.
That’s the finding of polling by Channel 4 News this week. They also found only 1 in 7 support tax cuts if it means cuts to public services.
Spending cuts later
Our polling shows the same. Since 2020 our research has shown most people don’t want tax cuts if it means public services get worse.
And tax cuts now are almost guaranteed to mean public service spending cuts in the future. Jeremy Hunt is talking about this openly.
The missing £36 billion
One way to inject more money into our public services would be to go after those who dodge tax.
Our friends at TaxWatch report that at least £36 billion of tax revenue goes unpaid every year.
This is the ‘tax gap’. It occurs in part because HMRC don’t have the resources to properly investigate tax dodging.
Another symptom of this was revealed on Monday. The Observer found that HMRC investigations of wealthy tax dodgers have halved in the past five years.
“Parliamentary research shows that when the government invests in HMRC, the return on investment is significant,” I told the newspaper.
In response to the story, the head of the Trade Union Congress, and boss of Richer Sounds, called on the government to take action against tax dodging .
He should tackle tax dodging
The tax gap is a huge sum of money. £36 billion-a-year is the same as the entire UK defence budget, or almost half the education budget.
What’s the solution? TaxWatch rightly points out that HMRC needs to be better resourced to uncover tax dodging, and close the tax gap.
For every extra £1 invested in HMRC, £18 is returned in lost tax .
HMRC is also facing criticism this week for “all time low” customer service. Regular taxpayers are not getting the support and guidance they need.
It can be impossible to speak to someone on the phone, while there is a special VIP phone line for ministers, civil servants and high earners.
The solution is obvious. The government should invest more in HMRC to boost staff levels.
This would generate more money to tackle the crises plaguing our public services. But will the chancellor listen?