The whole of Britain should be a tax haven

George Osborne should use his budget to cut taxes. You can’t redistribute wealth unless you first create some. Simples

Far be it from me to suggest the central paradox of leftism, but the recent election campaign seemed to highlight it better than ever. If you believe so passionately in the redistribution of wealth, shouldn’t you also believe in the creation of some wealth to redistribute? But Labour knows that would defeat its fundamental object of building a client state that would obediently vote for it. If you have policies that encourage wealth creation, you encourage job creation, and a rise in real earnings. Then you don’t need a massive welfare state, and you end up with a clientele too small to be politically effective. Simples, as the meerkat says.

ADVERTISING

So I cheered on Thursday when I heard that George Osborne was embarking right away on further spending cuts. He should have made early, deep cuts in the last parliament: but we were told the Liberal Democrats wouldn’t let him. That was when the now forcibly retired Vince Cable was taken seriously in matters of political economy. Had Mr Osborne been able to make heavier cuts in 2010-11 he would have liberated the money to cut taxes, and stimulated the economy more quickly. The recession would have ended sooner. And this would mean that many still suffering from stagnant or declining real incomes would be feeling that much better off than they currently are.

The Tories were right in their campaign to argue that Labour would be toxic for business. They were less satisfactory when it came to showing why that would have mattered. Too many people think the Tories support business purely because it is where they draw their funding from. We have heard too much talk of Mr Cameron and Mr Osborne running an economic policy that solely benefits their “friends” in the City or in industry, and it is nonsense. A pro-Business economic policy is one that ends up benefiting everybody.

Even the Tory party believes in redistribution of wealth – if it didn’t it would be unable to fund the NHS, state schools, care services and welfare provision that a civilised society requires. And you only raise the money to fund those services by having successful businesses that pay taxes and put millions of people in work.

George Osborne tells SNP to ‘put up or shut up’ over cuts

It is time to become aggressive about this point, even though the election is won, because it is fundamental to the difference between conservatism and socialism; and it is not appreciated enough by a public for whom the narcotic spell of the welfare state has yet to be thoroughly broken. Again, it is simple. You don’t tax a loss. You only tax a profit. If you want to raise revenue, business has to be profitable. If you want to cut public spending, business has to be profitable too, because when it is making money it adds people to its payroll.

Not only does it then support them, instead of the state, but they also develop earning power that makes them bigger contributors to the economy, through income tax and their payment of indirect taxes. So anything a chancellor does for the private sector doesn’t just fatten up a few cats who contribute to Tory party funds, it makes everybody richer. And, if you want to be ideological about it – and why not, since Labour always is – it takes the state out of the lives of more people, makes them more self-reliant, and reduces the power of politicians over those who elect them.

The good start Mr Osborne made on Thursday now needs to be built upon. He has the chance to do this in a month’s time when, on July 8, he presents a Budget. Parts of the leftist press are calling this an “emergency” Budget, as if the nation is in some sort of crisis. Well, perhaps it is: a crisis of continuing to be grotesquely overtaxed. As well as not properly enlightening people about the benefits of profitable businesses, the Tories have done too little to illustrate the damage done by the higher taxation that Labour brought in.

It can be summed up as follows. If you want to destroy jobs, raise taxes. Higher corporation tax (which Labour threatened during its recent campaign) causes firms to throw people off payrolls. Higher income tax at the top rate (which Labour introduced to try and patch up its disastrous public finances) drives wealth-creators to less punitive tax regimes. Higher indirect taxes reduce demand, and when there is less call for goods and services the people who provide them lose their jobs. Before Mr Osborne does what I hope he will do on July 8, he needs to spell out these ineluctable truths to the public. With perhaps almost five years until an election, the message might well sink in before the Tories next go to the country, provided it is repeated often enough, and with conviction.

George Osborne is right to be cutting public spending further and faster

Mr Osborne should raise the 40 per cent tax threshold considerably this year, and every year of this parliament. Currently 4.6m people pay 40p in the pound, and the present threshold is £41,900. HM Revenue and Customs forecast that even if the threshold reached £50,000 by 2020 an additional 900,000 people would be paying it. This is a brake on aspiration and enterprise. It is also a brake on incentive and therefore on productivity, and low productivity is the most poisonous problem in our economy today. He should also abolish the 45p rate, which raises hardly any extra revenue but gives enormous amounts of work to accountants, and take as many low-paid people out of taxation as possible, to encourage their aspiration.

Some public spending is always necessary. But it is not a good in itself. The state has fundamental responsibilities, but providing employment for the masses is not one of them. With that in mind, Mr Osborne should also consider zoned corporation tax cuts in areas where there is heavy dependence on the state for jobs or for welfare. In Northern Ireland the economy is weakened by the 12.5 per cent corporation tax rate in the Irish Republic. If it were 12.5 per cent in the Province the employers, and the jobs, would flood in, not least because of the superiority of the Northern Ireland education system and the high calibre of its workforce. When that is proved to work it could be tried in areas of Northern England.

Indeed, I can’t see what is wrong with making the whole country a tax haven: for I have yet to visit a tax haven where the people are mired in poverty. If Mr Osborne makes that his aim for July 8, he won’t go far wrong.