We cannot let the Left use Covid as an excuse for radical tax hikes

One should give the Left its due: it never lets a good crisis go to waste. The virus has trashed the public finances, so the answer from the “experts” must be, yes, you guessed it, taxing what is left of the economy until the pips squeak.

The outrageous ideas being floated by HM’s supposedly impartial Treasury – in reality intellectually identikit, social-democratic apparatchiks – include a repudiation of the Tory manifesto, a wealth and property levy, higher VAT, income tax and corporation tax and just about every other one of the modern liberal‑Left’s wet dreams, repackaged neatly in a box stamped “Covid”.

As Antonio Gramsci, one of the Left’s most influential thinkers, put it in his Prison Notebooks: “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.” Lockdown, the greatest recession since 1706, a deficit of up to £516 billion: there are no better “morbid symptoms” and the Left, now hegemonic in our institutions, knows exactly how to react.

The authors of the Treasury memo even pretended that the only alternative to tax hikes were the kinds of “austerity measures”, such as freezing wages for nurses and teachers, that would be unpalatable to Boris Johnson. Other powerful voices are fighting to halt Brexit, waging class war by trying to claim that some companies should be excluded from furloughing, seeking to reradicalise the unions and to permanently increase unemployment and welfare benefits.

There are even those who are enjoying the crippling collapse in GDP and mobility for environmental reasons. In some cases, ministers themselves are being the useful idiots: note the absurd obsession with cycling in the Government’s return to work documents, and the relentless bashing of the car, even though the latter is the most robust form of transport in an emergency.

The model, of course, is the aftermath of the Second World War; the Leftist dream is the perpetuation of the “emergency” powers to deal with the virus, turning us into a high-tax, social democratic paradise like France, Belgium, Finland or Denmark.

Yet Johnson wasn’t elected to turn Britain into a self-governing Brownite utopia. This must be a Tory government or else it will fail. If they have any sense of their own survival, of their self-worth, of the veracity of their core values, the answer from the Government, the Tory party and Right-leaning voters to all of these Left-wing, statist proposals needs to be unequivocal: over our dead bodies.

This crisis will not be used to undo 2016 and 2019, destroy the centre-Right and turn Britain into the kind of country that Keir Starmer and Ed Miliband dream to live in, they must insist. There will be no massive tax hikes and no war on wealth. This is not a transformational moment for the welfare state: furlough was a necessary evil in a once-in-50-years emergency, not the new normal each time the business cycle turns.

Free-marketeers, libertarians and Thatcherites have given up a great deal. We’ve accepted, by and large, the need for a temporary, massive extension of the state. We’ve gone along with a huge curtailment of civil and economic liberties. Pandemics are exceptional events, like world wars or natural catastrophes. During such moments, the usual rules we believe are best for society – as much freedom within broad rules as possible, relying on free enterprise, promoting a Hayekian “spontaneous order” – need to be temporarily suspended to allow greater collective action.

So what now? First, any government that wants to spend £200 billion on HS2, 0.7 per cent of GDP on foreign aid, shell out ever more on green subsidies and continue with large amounts of unnecessary programmes has zero right to an extra penny of our money. None. Next, the economic cost of dealing with the coronavirus is too high. I support furloughing and the aid packages, but they cannot become a crutch to keep unviable enterprises going forever in a changed world. The Government is right to be proceeding cautiously, but it has room to manoeuvre. Why not let all under 45s return to normality in a couple of weeks’ time? Or speed up the opening of schools? The Government has terrified the public: we need a more reasoned assessment of risks.

Thirdly, the centre-Right needs to accept that if the choice is higher taxes or a one-off, large increase in the national debt, the latter is the least bad. This is not 2008 when the City thought we were “lying on a bed of nitroglycerine” and swathes of supposedly solid economic activities turned out to be a mirage.

Fiscal conservatism – a balanced budget – is wonderful, but less important, in the medium-term, than lower taxes. The Chancellor needs to scrap the old fiscal rules, set a new maximum debt to GDP target (say 130 per cent) and map out a long-term plan that includes making up for Covid, sorting out demographic pressures and accounting for extra infrastructure.

Next, the Tories and Rishi Sunak need to start working on a proper private sector growth strategy. More GDP is the answer to most things. The Government has lots of ideas that relate to infrastructure and science, but it needs something else: a free market plan to encourage job creation and investment without the use of public money. This is what has been missing from Tory thinking for years. We need proposals such as turning the whole UK (or the entire Northern part) into a giant free port, radical pro-growth tax reform, the release of land for new suburbs, a privately financed road network and the legalisation of modern scientific techniques for agriculture.

Last but not least, there are lots of savings the state can make that needn’t be defined as “austerity”. Public sector pension reform? Weeding out the quangocracy? Creating an insurance (not tax) system for social care? Ending subsidies, spending, waste? Wouldn’t pensioners understand the triple lock is no longer affordable? It’s time to drastically re-engineer the state, while avoiding the dreaded A-word.

This is a moment of maximum danger, to paraphrase Johnson in another context. When it comes to economics, the Tories cannot afford to be in office but not in power.

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