BRITAIN

For various reasons it has suited both the Labour and Conservative parties not to have tax policy turned into a central issue in the election campaign.

Under a Labour government led by Jeremy Corbyn a significant rise in public spending would be envisaged. The party leadership, too, has made no secret of its intention to raise taxes on the better-off – on those, as the saying goes, ‘who have the broader shoulders’. But, the definition of broad shoulder has, for some time now, been left conveniently undefined, while the resort to higher borrowing, the mantra of any socialist party, is unlikely to assuage voters after the calamitous borrowing and debt of recent years that has necessitated such a lengthy period of austerity and spending constraint.

The Conservative Party have also been markedly reluctant to be drawn into the discussion on tax, having long symbolised itself as the party of low tax. While it may claim to have lower spending commitments than Labour this does not necessarily mean that taxes will not rise. Chancellor Philip Hammond, for one, has made known his desire for greater financial flexibility and for the party to drop the ‘tax lock’ pledge. Ultimately, this begs the question of what Conservative tax policy is now.

Policies of taxation are especially sensitive at this point in time given the background of a slowing economy and forecasts of a deepening downturn. There have been signs over the last few days that the election battle – largely focused till now on the personalities of the respective leaders – is swinging back towards more practical and tangible issues.

Both parties have pledged not to increase the 20 per cent rate of VAT until 2022. As matters stand, though, the total tax burden is set to rise to its highest level in 30 years – even were the tax lock to stay in place. The March Budget stipulated that the tax burden will rise to 37.2 per cent of national income by 2019-20. And with overall government debt approaching 90 per cent of national income, voters deserve more informative answers on future tax policy than the rhetoric currently on offer.

The likelihood is that continuing low growth for the foreseeable future and a worryingly high level of government debt will act as a powerful restraint for whoever wins the election: any increase in government spending will have to be found from improved productivity and efficiency gains. That is not a particularly comfortable message to portray for any party aspiring to be the next government. It is, however, an unavoidable truth whatever the political rhetoric may claim.