Slash taxes to ease the cost of living crisis
Nobody, I don’t think, would disagree that rising living costs are having a negative impact on the households, businesses and, of course therefore, the wider economy.
To illustrate my point of the escalating costs of living reaching new heights, last week it was confirmed that average rental costs have risen all over the UK by some 2.1 per cent over the last 12 months. The average monthly rent is now up to £757 in England and Wales, and with the current rate of inflation higher still, the rising cost of living is becoming a very real problem for people across the UK.
But what to do about this situation, dubbed the ‘cost of living crisis’, taking into account the economic environment and relevant economic factors, is where there’s always room for ‘discussion’.
To my mind, this cost of living crisis could be significantly eased and economies could dramatically benefit if current levels of taxation were slashed, as this would give more people more disposable income –to spend AND save – and businesses more opportunities to invest and employ.
In order to combat the ever-increasing costs of living, the government needs to cut taxes, make the system a whole lot simpler, allow competition in highly-regulated industries and eradicate grants and subsidies for those who really don’t need them. There also needs to be more effective solutions for healthcare and the education system.
It’s not just about income and corporation tax, but also the so-called ‘stealth’ taxes that the majority of people aren’t even aware of, that are causing living costs to soar.
Whether it be the VAT and the many other levies on the price of petrol, the exorbitant business rates retailers are subjected to, which are far higher than corporation tax, or theprice hikes on gas and electricity, which allow the government to blame avaricious capitalists for the increase, rather than higher policy and regulation costs. This off-balance sheet spending carries right over the taxation spectrum, and the tax payer becomes a source of easily-acquired gain.
The rising cost of land is also rubbing government salt in the tax-payer’s wound. The strictly regulated planning system of developable land is dealing the economy a poor hand. High land prices leads to an increase in all other related costs, meaning people need to earn a higher salary to live in these areas, which resonates through the economy.
I’m not just referring to the UK here. This problem of increasing taxes and a rising cost of living is prevalent throughout the majority of the Eurozone and the US, amongst other places too.
In short, I would suggest, a bonafide way forward to enable the wider population to notice any tangible reduction in the cost of living – which would, naturally, boost theoverall economy – would be to slash taxation and whilst we are it, make the system simpler and more user-friendly.
Perhaps Churchill put it best when he famously said “Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle?”
Nigel Green deVere Group
Blog written 3rd of November