The Economy

I can point to successful economies in the world that have the taken the view that the way to get out of the problem of a flatlining economy is to release more money back into the economy through the stimulus of lower taxation. I have referred to one tax that raises little money but acts as a tremendous disincentive to enterprise: the 50% tax rate. I would abolish that, as it achieves very little apart from bearing down on enterprise. We still have the longest tax code in the world; indeed, it is longer than the tax code in India. The Centre for Policy Studies estimates that the marginal tax rate on poor people is as much as 96%, while the marginal tax rate on higher earners is 57%. There is a greater imperative than ever before for Government to be the facilitator, not the central planner. They can, by all means, deliver some public works, but they must not be fantasy or vanity projects such as high-speed railway lines. Instead, they must be works such as the third runway at Heathrow, which the market is prepared to build for us because the market wants it. By all means, let us have public works, but they must make sense in terms of the marketplace, and let us also have tax cuts. I support the Liberal proposal to take the lower paid out of tax, because that also delivers incentives and cuts the marginal tax rate on the lower paid. I want us to have a much flatter overall tax system, too. Despite all that we have tried to do, Great Britain ranks as the 72nd country in the world for Government wastefulness, which is lower than Tajikistan and Ethiopia. The House may not accept all my arguments, but I hope Members will accept that an intellectual case must at least be made for a smaller and leaner Government who tax people less and deliver more vitality and entrepreneurship back into the economy. That is the only way we will fight our way out of this recession.