coalition – Conservatives for Liberty

Lower taxation: The moral imperative

Elena Attfield / Blog / coalition, conservative party, economy, tax / 0 comments

19/06/2015

What do a rise in investment and a rise in tax compliance by businesses have in common? Firstly, they are both happening in Britain today. Secondly, they are both a positive and inevitable side effect of free market favouring policies implemented by the previous Coalition government, namely lower direct taxation.

Since its formation in 1834, the Conservative Party has proudly worn the honour of being the party of low taxation. On occasion, however, the misfortune of sacrificing basic economic principles for the sake of political purposes or timing has been allowed.

During the first half of the Coalition government, trivial changes to tax, which raised the 40p threshold by only one per cent (less than the inflation rate), saw a 2014 estimation of 400,000 people dragged into the 40p rate. 400,000 ordinary working people needlessly punished.

The planned raising of the threshold for the 40 per cent is therefore very much welcome, though this is only a small step on the path to further liberation from an intruding government. Another essential part of the agenda is further reform of the welfare system to reduce the £87bn budget imbalance. Whilst this is surely a laissez-faire style policy, greater decline in tax burdens remain a rightful expectation of the electorate.

Whereas one might assume that the natural way to sell a political party as a moral, compassionate and vote-attracting brand would see plentiful proposals for higher welfare support, unlimited finance poured into the NHS, and promises of free childcare, there is in fact a strong case to be made for the morality of a freer market.

This morality is illustrated by fiscal responsibility and reduced government interference which will lead to greater prosperity and increased personal freedom. The financial crisis of 2007-08 might have brought such an economic system into disrepute but we must recognise and celebrate its predominantly beneficial influence in Britain.

A significant distinction between the two main parties in the run up to the election was their policies on taxation. Whereas former shadow chancellor Ed Balls laid out plans for a renewed 50p top rate of tax, the Conservatives made popular reductions in taxation whilst in government. Although this is fruitful economically, I would argue that such reductions do not go deep enough to show off the virtues of the free market or win the hearts of the disillusioned electorate and swing voters in the future.

Here, the Conservatives have an obligation to continue to emphasise their principles of low taxation. Britain’s corporation tax rate stands as a proud example of the positive side effects of lower taxation. A fall from 28 per cent to today’s 21 per cent has already seen higher growth and investment, and the 20 per cent rate will not only establish Britain as the country with the joint lowest corporation tax in the G20, but is predicted to see GDP growth of 0.6-0.8 per cent and investment growth of up to 4.5 per cent in the long term.

It is evident that taxing corporations less, no matter how voters view it, means higher consumption and more jobs without necessitating bigger government. Inward investment especially must be remembered as something highly sensitive to intrusive government. For this reason, Britain must compete with other nations’ tax rates and cuts in red tape.

From 1997 to 2012, Britain plummeted from 4th position to 95th in the World Economic Forum’s tax competitiveness ratings. A major priority of the Conservative government must be to reverse this decline. If tax cuts truly do equate to £7.8bn savings for businesses per year by 2016-17, this will naturally equate to the business-friendly environment any economy desiring jobs and higher standards of living aims for.

Perhaps today’s most visibly moral example of low taxation, however, can be found in the increased personal tax allowance of £10,500. Affording working class families an £800 lower tax bill than they had under Labour is not only a popular policy but it also makes far more sense than continuously, and artificially, increasing welfare support or regulating higher minimum wage laws for those on low incomes. The benefits of this policy will be extended once those earning the minimum wage are lifted out of income tax altogether.

Assurances of an increasingly smaller governmental role in the post-2015 economy are certainly long overdue for libertarian and classical liberal voters. Furthermore, given archetypal Labour Party promises of endless money provided by the state (or rather, the taxpayer), it is about time that the Conservatives followed through on their pledge to let us keep more of our own money, and then boast about it loudly and proudly when it is achieved.

With that, I shall leave you with this quote from the IEA Reader’s Digest Condensed Edition of FA Hayek’s renowned bestseller, The Road To Serfdom:

“Well-intentioned socialists… …should be able to appreciate that reaching into one’s own pockets to assist one’s fellow man is laudable and praise-worthy. Reaching into another’s pocket to do so is theft and by any standard of morality should be condemned”.

Elena is a proponent of freer markets and a macroeconomics/IR enthusiast. She tweets at @elenaatt

Plain packaging: plain wrong

Paul Nizinskyj / Blog / coalition, conservatives, jane ellison, plain packaging, smokers, smoking / 0 comments

04/12/2013

Plain packaging of cigarettes has to be the worst idea since Jedward attempted to sing. With Public Health Minister Jane Ellison’s announcement that plain packaging could be put into force by 2015, the nanny state is back, under a Conservative-led government no less.

Plain packaging is another attempt by members of the militant anti-smoking lobby to treat smokers as if they are the pariahs of society, whose products should not be left to the whims of the market, but priced out of their hands and hidden in ugly packets.

In doing so they are treating smokers as socially abnormal. As someone who believes in individual freedom and an individual’s right to smoke, including making decisions that could harm their health without interference from the state, I find this policy abhorrent. I assume, as firm believers in the rights of the individual, most Conservatives will agree with me and that’s why I call on the Government to think again on plain packaging.

Branding is an important part of the consumer choice that is the lifeblood of the free market. After all, it is different brands of products that create competition, leading to more consumer choice. That is as relevant in the cigarette market, as in any market.

Smokers should have as much choice as individuals to choose their brand free from government restriction, as any other person. Plain packaging by contrast would remove brands, restrict consumer choice and run roughshod over the free market, by trying to denormalise a legal product.

Even if I didn’t have ideological problems with plain packaging, it’s clear that it has more holes in it than Swiss cheese. The claim in support of plain packaging is that it will make smoking less attractive to young children and young adults – yet the evidence to back this up is as thin as a size zero model. Indeed, former health secretaries Alan Johnson and Andy Burnham, hardly members of the smokers’ union, have said there is no proof that plain packaging reduces the number of children smoking.

Plain packaging is also a boon to criminal masterminds in this country, who will welcome the chance to make more counterfeit cigarette packs than ever. Ruth Orchard, the Director of the Anti-Counterfeit group summed this up well saying: “Plain packaging will be welcomed by counterfeiters. It will make their job much simpler and make it harder for consumers to spot fakes.”

Those involved in the counterfeit cigarette industry will have no qualms about using the money they get from this for more dangerous criminal activities, as well as mixing tobacco with dangerous substances that could harm smokers. It is another example of the unintended consequences of attempted social engineering by the Government, where the attempted restriction of the product harms individual freedom, whilst benefiting criminals.

In summary, plain packaging is an authoritarian idea that tramples over individual freedom based on little evidence, whilst benefiting criminals. Its another attempt to regulate individuals lives and I believe people who believe in freedom should continue shouting this message from the rooftops until the Coalition Government abandons this terrible policy.