The announcement by the Chancellor in the budget that he plans to freeze income tax bands for four years reminds me of the budget of Geoffrey Howe in 1980. In 1980 the Chancellor also froze income tax bands, when inflation was 15%, a massive tax increase. Yesterday’s more modest proposal, given today’s inflation rate, will still raise £8 billion.
1980 also saw an increase in VAT and an extra 20% tax on the North Sea Oil industry. It all helps explain my favourite statistic, Margaret Thatcher increased the tax burden,, she did not cut it.
I know it goes against everything you have been told over the decades but tax as a percentage of GDP was 29.6% in 1979 and 29.7% in 1990.
The tax raising Thatcher years are so little known because the burden was shifted onto the poor, consumption and a new very wealthy industry, North Sea oil. Headline grabbing tax cuts for the wealthy in the late 1980s did not reverse that trend.
The problem is the ignorance of these simple facts, the myth if you will, has handicapped every Chancellor since. The Tories endlessly repeat they are the party of low taxation, Labour is terrified of being seen as the party of tax and spend.
But the fact is the country has a tax take of around 1/3 and has for decades, if it needs to be higher to reduce debt or fund the NHS and Social Care let’s be honest about it.
We could start by remembering that Maggie Thatcher increased taxation.
https://jonty.substack.com/
Raising taxes is far from easy Jonty as the Sheriff of Nottingham found out all those years ago. If the people do not concur and consent it don't happen and one ends up in a mess like some other countries I could mention.
Thatcher was an economist who believed in managing the UK economy the same way she managed the housekeeping budget at home and everybody understood her philosophy. Yes she taxed but as you say the nations finances were in good order at 29% of GDP. They are now at 85% of GDP and dress it up how you like anything over 60% is not good. We have spent to get out two holes in 2008 and 2020 (we had no choice). I'd rather have had a Tory government in both those crises than a labour one.