New blow for Rachel Reeves as even Tony Blair opposes new tax hikes | Politics | News
Sir Tony Blair is opposing Rachel Reeves’ potential tax rises, claiming the Treasury is not a good use of taxpayers’ money. The former Labor prime minister believes the top rate of income tax should be cut below 40 per cent, which would be to the detriment of Sir Keir Starmer and the Chancellor. Speaking to the authors of the new economics book, Sir Tony said income tax and National Insurance were extremely high.
He suggested that taxes should be lowered to boost economic growth by encouraging Britons to work; especially if welfare reforms make it harder to get government help. This comes as Ms Reeves is reportedly preparing to cut spending as well as raise taxes again in the November Budget in a bid to plug a multi-billion pound black hole in the public finances.
The Chancellor is expected to hit UK wealth creators by imposing a wealth tax on assets, claiming “those with the broadest shoulders” should foot the bill.
Although the government says growth is “task number one” in the upcoming financial statement, Sir Tony believes the way to do this is to cut taxes, not raise them.
Speaking to the authors of the book Prosperity Through Growth, which will be published next week, the former prime minister agrees with economist Arthur Laffer, who believes governments can raise tax revenues by reducing tax rates.
“Even the Labor prime minister, Sir Tony Blair, argued that when you look at the levels of direct taxation of people, they are really high, and from a historical perspective they would be considered extremely high, and people thought they were being taxed at a high rate,” the authors wrote in the book.
“He pointed out that the government had spent too much money and the results were not good. There is a real desire to untie the knot. And he thinks we will face much lower tax rates in the future.”
“He concluded that the only thing we could do to change the way people view growth is around the tax system and re-educate people that there is a work-incentive aspect of taxation that cannot be ignored.”
The authors added: “He also points out that the need for stimulus also means looking at the welfare system, and that is where economies that have emerged as successful are looking more at taxation.”
According to the Telegraph, Sir Tony mentioned that the higher income tax rate of 40% was too high, although it remained at this level when he was prime minister.
Shadow Chancellor Mel Stride said this was “to say that even Tony Blair recognized what the Conservatives have long understood”, namely that “punitive tax rates do not raise revenue, they set it back”.
