George Osborne should learn the lesson of his one real tax cut

Since he has been chancellor, George Osborne has been far busier raising taxes than reducing them. But, says Matthew Lynn, cutting taxes is the only serious way to revive the economy and raise more revenue.

Tory chancellors have a reputation as tax-cutters, and there was a time when they were. But in the three years that he has been chancellor, George Osborne has been far busier raising taxes than reducing them. Energy taxes have gone up, as have VAT, capital gains tax (CGT), and stamp duty. There has only been one cut of any significance cutting the top rate of income tax from 50% to 45%.

And what happens? This month we learned that the one time Osborne cut a tax, he raised more revenue. Perhaps he should learn from the experience. Not all tax cuts raise extra revenue it would be extreme to suggest that they did. But Britain is now at the point where taxes are so punitive that cutting rates not only improves the incentive to work, but also means the government gets more money.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.