One of the aims of this website, when it was first created, was to be a forum to find conservative methods to reach progressive ends. Taxes should be cut from the bottom up and public expenditure reduced from the top down. Labour has failed to break the UK poverty trap. It is the duty of a Conservative government not to let the same thing happen again and prove to the country that they are the real progressive force in British Politics.
Raising the personal allowance to £12,000 would take 7 million low-paid workers out of the income tax net altogether. People working full time or less on the minimum wage would pay no income tax at all. This tax cut would put at least £20bn per year back into people’s pockets (according to real life figures), allowing considerable additional spending and investment in the economy.
This is the key to overcoming recession and restoring economic growth. As well as stimulating the economy by giving people more disposable income to spend and invest, raising the personal allowance to £12,000 would strengthen incentives to work, help to eliminate the ‘poverty trap’ and make low-paid jobs more economic – greatly increasing opportunities for the unemployed, and a step towards enhanced social mobility.
Often people find that as they start working, they both pay tax and lose benefits, leaving them little better off than they were before. Indeed, the effective marginal tax rates for people moving from benefits to low-paid jobs can be close to 100 percent. These proposals would change that.
The cost in tax revenue to put in place this proposal into place would be between £20bn and £30bn. Cuts must be avoided in areas that would otherwise adversely affect the poor in relation to the financial gains due to be made from the substantial increase of the Tax Free allowance, which are as follows:
- Scrap the Bus Service Operators’ Grant.
- Suspend further orders and upgrades for the Eurofighter.
- Reduce the government advertising and publicity budget by half
- Halve public sector spending on consultants.
- Slim down the Department for Communities and Local Government (DCLG).
- Rationalise the framework of regional business support.
- Cut 25 per cent from the budget of the Department for Culture, Media and Sport (DCMS).
- Abolish the NHS National Programme for IT (NPfIT).
I believe that this proposal is genuinely progressive and genuinely Conservative. It will do more for the poor in twelve months than the Labour Party has done in twelve years
A more detailed version of this article can be found on my personal blog. I was building on a previous article on this website.
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To be progressive we need to look back: under Disraeli, the point at which income-tax started to be paid meant that the low-paid worked virtually tax-free.