At the first hissing of the taxpaying goose, Rishi Sunak has turned and fled

The chancellor insults our intelligence by attempting to style himself as a ‘low-tax Tory’

John Rentoul
Saturday 04 December 2021 13:17
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<p>Rishi Sunak, pretending a public spending rise is a tax cut</p>

Rishi Sunak, pretending a public spending rise is a tax cut

Rishi Sunak has a slick press operation. The front-page lead headline in the Daily Express on Wednesday read: “Rishi: my actions prove I’m a low-tax Tory”. And a similar message led The Times today: “Sunak plan to slash taxes”.

It’s so slick, it looks desperate. The one thing the chancellor’s actions do not “prove” is that he believes in lower taxes. “Actions speak louder than words,” he told the Express, claiming that spending more public money on universal credit amounted to “cutting taxes for millions of the lowest paid people”.

This is redefining the meaning of words so blatantly it would make the prime minister blush. He is paying more universal credit to claimants in work, so that they keep more of their benefit as their earnings rise. The rate at which benefit is withdrawn works like a tax rate, meaning that claimants now keep 45p of each extra pound they earn, instead of 37p, but it is not a tax cut. It is a welfare spending increase.

It may be a welcome policy change – although it is no substitute for the temporary rise in the basic rate of universal credit, which applied to people both in and out of work and which has now ended – but it is not a tax cut.

Unabashed, Sunak has launched another assault on the intelligence of the electorate today. According to The Times, he has “told officials to draw up detailed plans to reduce the tax burden”, which he wants to do before the next election.

Again, this involves Johnsonian levels of chutzpah. This is a chancellor who has announced huge tax rises over the next two years, but before they have even come into effect he now says he wants to cut taxes.

What is worse is that he wants to cut taxes that bear more heavily on the better-off – income tax, the higher rate of income tax and inheritance tax – while the tax that is actually going up next year, national insurance, is less progressive.

If he really thinks he could cut taxes significantly in 2024, the likely election year, he shouldn’t be putting up taxes so much in 2022 and 2023. It not only looks like cheap election bribery, it looks like poor fiscal planning too.

It might be different if Sunak said he had to put up taxes to regain control of the public finances after the coronavirus emergency, but if the economy bounced back faster than expected, he would ease the burden slightly. That is what was implied in the Budget, and it would be the fiscally responsible position. Politically, however, it would mean that he is a tax-raiser first and a tax-cutter only if and when prudent.

That is not the message the Conservative Party – or indeed the country – wants to hear. Sunak got away with his first big tax rise because it was remote. In his first Budget in March this year, he announced a rise in the corporation tax rate from 19 per cent to 25 per cent, to take effect in April 2023. Because it seemed a long way off and no one thinks of taxes on “corporations” as affecting them, there was hardly any hissing from the taxpaying goose – although it is a huge amount of money that will mainly come from customers and employees.

Sunak must have thought he was the new Jean Baptiste Colbert, Louis XIV’s finance minister, who said: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

Thus he was emboldened to take the next step, agreeing with Boris Johnson and Sajid Javid, the health secretary, that national insurance contributions should go up to pay for clearing the NHS backlog (with a bit of ill-advised window-dressing on social care tacked on). This time, the goose hissed violently. The rise doesn’t come in until April next year but the chancellor has already taken fright.

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Liz Truss, the foreign secretary and Sunak’s rival for the post-Johnson succession, criticised the tax rise in the cabinet meeting that approved it (along with Jacob Rees-Mogg and Lord Frost). Just as Sunak responded to Truss posing in a tank in Estonia on Tuesday by being photographed with Gurkhas yesterday, he is now trying to outdo her as a “low-tax Tory”.

This is a foolish and panicky response. Sunak’s high standing is the product of his calm and responsible handling of the coronavirus crisis. He did the right thing by borrowing vast sums of money to keep people in jobs, but the British people knew that there would be a price to pay later. They may not like the big tax rise when it cuts their pay in April, but they know it is a choice that cannot be dodged.

Sunak is making a mistake in such a transparent pitch to the low-tax dreamers of the Conservative leadership selectorate. Both groups – the MPs who draw up the shortlist of two candidates and the party members who choose between them – would be more impressed by a chancellor who took tough decisions and defended them. Instead, Sunak has tried to disown his own policy and pretend to be something he self-evidently is not. It is time for him to say boo to a goose.

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