It’s time for the lazy public sector to flourish – we will all pay for it

The country has grown to impose the highest tax burden on the productive part of the economy since 1948. British corporation tax has been increased to 25%, up from 19% at the beginning of this Parliament. The Institute for Fiscal Studies recently calculated that since 2010, Tories have introduced more than a dozen new taxes, making the tax code the longest in history, which “have not resulted in a fairer or more economically efficient tax system.”

This bad situation is sure to get worse. Whoever wins next month, the frozen income tax thresholds will increase the tax burden by £20 billion a year by 2028-29, even after taking into account planned cuts to National Insurance.

Labor intends to fund a range of new commitments through VAT on private school fees, abolition of foreign state status and the extension of windfall tax to oil and gas.

However, this will only yield relatively small amounts, especially after taking into account the second-order effects such moves will have, such as pushing more students into state schools, losing wealthy people from the UK and reducing investment in oil and gas. The Tories want to spend more on pensioners, childcare, health care and defence.

Both sides have announced billions in new revenues from tackling ‘tax fraud’, meaning more money for HMRC enforcement officers. It also costs money, as many innocent people will spend time, effort and money defending themselves against invasive investigations.

The biggest red flag is unspoken expenses. Under the Government’s current plans, public sector spending on justice, local government and further education will have to fall to ensure the burden on the NHS and pensions continues to rise. However, Keir Starmer and Rachel Reeves have confidently declared that there will be “no return to austerity”. To avoid real cuts in the long term, they will need to raise an additional £20-25 billion.