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No tax cuts, we’re Tories!

Whither the Tories as a low-tax party? Well, I came across this piece of defeatism by Danny Finkelstein, who was once an adviser to former Prime Minister John “bonker” Major.

Essentially, Finkelstein writes that the Conservatives should stop talking at all about tax cuts since it would give them nil public credibility in arguing for reform of the public services.

“There have been times when tax cuts have been a sure-fire election winner and such a time will undoubtedly come again. Yet in deciding to put so much emphasis on public services, the Tories have decided that the next election is not such a time. for if public services are to come first, something must come second.”

Firstly, I was not aware that any senior Tory, unless under the influence of booze, has made a principled and coherent argument for cutting taxes in the last five years. In fact, it seems this previously major feature of what passes for Tory thinking has fallen completely off the radar. More’s the pity.

Secondly, the supply side argument. Surely Finkelstein and others should have grasped the point that most major governments, including the present British one, set taxes at rates which actually means they raise less revenue than otherwise would be the case due to the blight on incentives high taxes cause. While I don’t expect every pundit to have heard of the Laffer Curve it would be nice to think that the enormous success of Ronald Reagan’s and Margaret Thatcher’s tax cut measures would have left some kind of mark. Clearly some reminders are needed.

Increases in public spending or holding spending where it is has not proven to work in delivering good health or education, as the shambolic state of Britain’s socialised system of health care proves. Many of the problems have little to do with money, more with ideology. Finkelstein’s argument is predicated on the idea that reform necessarily will cost as much, if not more, than what is being spent at the moment. That is questionable, to say the least.

And finally, by accepting the notion that one cannot cut taxes while sorting out health, education, etc, the Tories would be allowing the Labour government to dictate the very terms of the debate. That is a recipe for instant failure. That is why Labour-leaning commentators anxious to shaft the Tories urge it as the Tories’ only hope for salvation. Such folk are false friends and should be shunned.

And Mr Finkelstein should recall that although his domestic agenda is now either in tatters or in cold storage, one reason why George W. Bush made it to the White House was on account of tax cuts.

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