High tax consensus will hit UK's growth

Theresa May
Even the Tories are putting the UK economy on a path of lower growth in their tax plans

The first rule of economic forecasts is not to believe them, or at least to take them as impressionistic sketches of where the reality could be, rather than precise predictions. The same applies to the political parties’ manifestoes, and especially to the fiscal analyses constructed upon them. The Tory pamphlet was surprisingly long, but many of its policies were unsurprisingly vague. 

But all three main manifestoes have something in common: they all imply that the tax burden as a share of GDP, even if not actual tax rates, will rise sharply. That is the new normal in politics: all of the parties want to seize a greater share of the national pie, and none is willing to accept that doing so is both harder than it looks and extremely damaging to the economy.

It doesn’t really matter whether Labour wants to take us back to a 1949 level of taxation, as some believe is implied by its numbers,...


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