Coronavirus's effect on economy means now is not the time for tax rises – leader comment

The UK Government is right to avoid taking money out of the economy when it is so weak because of the coronavirus lockdown.
Boris Johnson has said the Conservatives'  manifesto pledge not to increase taxes remains in force (Pippa Fowles/10 Downing Street/Crown Copyright/PA Wire)Boris Johnson has said the Conservatives'  manifesto pledge not to increase taxes remains in force (Pippa Fowles/10 Downing Street/Crown Copyright/PA Wire)
Boris Johnson has said the Conservatives' manifesto pledge not to increase taxes remains in force (Pippa Fowles/10 Downing Street/Crown Copyright/PA Wire)

The Conservatives’ manifesto for the December election pledged not to raise income tax, national insurance or VAT, Boris Johnson pointed out as he confirmed this policy still stood, ahead of the Chancellor’s mini-budget statement today.

However, you don’t have to be Niccolo Machiavelli to agree that a leader should break his promises if circumstances change as dramatically as they have done as a result of the coronavirus pandemic and the electorate would probably have been reasonably forgiving if the Government had decided that increases were necessary.

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That said, putting up taxes would mean taking money out of the economy at a time when it is clearly in trouble and so it is a perfectly sensible decision not to do so. This means that the staggering cost of the furlough scheme and multi-billion-pound spending schemes designed to prop up the economy is currently being paid for mostly by borrowing.

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Johnson has demonstrated he is willing to go against the natural instincts of his party by meeting the sizable threat posed by Covid-19 with the full force of massive state spending. But even though interest rates are at historic lows, the UK cannot continue to pay its way by borrowing on ‘the never, never’.

Already, there is speculation that Rishi Sunak’s autumn statement in October could include both tax rises and spending cuts, although such difficult decisions will obviously need to be taken closer to the time so the economic health of the country can be gauged as the furlough scheme is wound up.

It may well be a fearful time for the country as a whole. The prospect of a severe recession with mass unemployment on a scale not seen for decades looms.

What the governments of both the UK and Scotland have done, however, is to buy us some time. It may be the virus will gradually fade away thanks to the lockdown and social distancing. Or perhaps scientists will save the day and come up with an effective vaccine – a breakthrough that could send a wave of celebration around the world in a tangible boost to the economy.

Our leaders have certainly made mistakes, but they are doing their bit to support the economy and jobs in our hour of need. And we, the public, should do ours too by spending what we can afford with the businesses that have been hardest hit by this crisis. If enough people do this, it will boost the economy and increase tax revenues. And who knows, it might just be enough to stave off tax rises so you don’t end up handing over a similar amount of cash to the government instead.

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