Tax Freedom Day, which falls today, is cause for celebration. It marks the point in the calendar when someone’s income stops paying for their tax bill and they start keeping the money they have earned. It is an annual reminder that people who work hard and play by the rules deserve to keep their hard won earnings. It is why cutting tax has always been a priority for Conservatives.
Four years ago we inherited a tax system that was designed to be as complicated as possible. Gordon Brown’s stealth taxes doubled the revenue the Treasury raised through taxation and National Insurance. In total, Labour put up taxes 178 times, and the myriad of extra charges was as complicated as the methods used by corporate tax avoiders today – and as morally compromising. For many of those years, Ed Miliband was the lieutenant who Brown trusted to invent these schemes.
The progress that this Government has made is extraordinary. We have cut taxes in every area. 25 million people have been given an income tax cut: by raising the person allowance we’ve returned an average of £705 to people’s pockets and taken three million people out of tax altogether. We have given councils the funds required to freeze or cut Council Tax. If you’re driving a car, you’ll be benefiting from the freeze in fuel duty. If you go to the pub this evening, you can toast a Conservative Chancellor who cut the cost of a pint by slashing Labour’s hated Beer Duty Escalator. Thanks to these and other measures, Tax Freedom Day has fallen three days earlier this year than it did last year. Long may that trend continue.
Yet tax cuts have not been an ideological extra; a pat on the back after the economy started growing. No, the economy is recovering because the tax burden has been reduced.
Nowhere is this clearer than the cut to Labour’s jobs taxes. We introduced an employment allowance of £2,000 a year, effectively a cut in national insurance contributions, to make it easier for small businesses to create jobs. It is thanks to decisions like these that there are 1.7 million more private sector jobs – and 1.7 million more people with the security of a pay packet. And cutting those workers’ personal taxes has left people with more money in their pocket and stimulated demand.
So while Labour used tax rises to cover up excessive Government spending, we have used tax cuts as part of a long-term economic plan to repair the economy and help Britain deal with its debts. It cannot be repeated often enough: we have cut the deficit by cutting taxes.
Labour, on the other hand, has not learned that tax rises damage the economy. They promise a new tax on the family home – a penalty on families and pensioners whose homes are worth more than a figure determined by Whitehall. Labour would increase income tax on the better off and put additional charges on the bonuses of financial sector workers. And they want to hit the elderly the hardest of all, by withdrawing the winter fuel allowance and reintroducing a cap on pension tax relief.
Those are just the rises they have announced. They have even hinted at raising income tax for everyone by 2%. Indeed, with unfunded policy commitments that cost £27.9 billion, there will be more tax rises around the corner if Labour gets into power.
The choice at the next election could not be clearer. If you want higher taxes, vote for Ed Miliband. If you want lower taxes, vote Conservative.
Priti Patel is Conservative MP for Witham