Why putting up taxes is the last thing Rishi Sunak should be doing to fight the coronavirus hit to our economy

Jim Armitage
·2-min read
<p>Don’t do it, Rishi</p>

Don’t do it, Rishi

If you had read the advice being dished to Rishi Sunak by the armchair politicians, you’d think he had no choice but to tax us all until our pips squeak.

But, while he’s certainly got some massive bills to contend with from Covid, he also has the prevailing wind of super-low interest rates.

The market has been shown to have an unquenchable appetite for UK debt, meaning we are effectively borrowing on interest free credit.

It would be foolish of us not to use it.

So, as he makes a few tweaks here and there in Wednesday’s spending review (most of the measures have been decided already), it should not follow that he has to put up taxes to pay for them.

A far better way of dealing with the £70 billion of extra public spending run up this year on the pandemic is to do everything he can to grow the economy.

Taxing business or the middle classes is not the way to do that.

Making the cost for employers of hiring and doing business by pushing through tax rises will merely crimp growth even further.

That, in turn, will lower the tax take, hit jobs and throw more workers onto welfare.

The mere fear of a rise in capital gains tax is already sending entrepreneurs and long-term investors to their accountants and brokers for advice on selling investments.

Some Tory MPs on the back benches worry about getting the country so deeply into the red.

Frugal householders never spend more than they can afford, they say.

But the analogy doesn’t work. Britain is not a family with 2.4 kids.

It is one of the richest nations on the planet, and is viewed as such by the global investment world. They are granting us the ability to issue sovereign debt on extremely good terms for years to come.

We would be foolish not to use it.

Taxation may have to rise when we get out of the other side of this mess, but right now, we should borrow and let the economy heal.

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