Labour came to power with promises to run responsible public finances; not raise taxes on ordinary people through income tax, VAT or national insurance contributions; and rebuild the public services. The chancellor also said she did not want to introduce a wealth tax. It is right to keep promises: Britain has higher debt than Germany and taxing the average person more would be bad for growth.
But the pressures are even greater than six months ago, with an urgent need to spend more on defence. There is too much despair in the commentary at the moment and the suggestion that there are literally no options is wrong.
We should take a deeper look at the tax system. There remain big loopholes and unfairnesses: because capital gains tax is lower than income tax, people like Rishi Sunak pay 23% on a £2.2m income – equalising these rates is worth £14bn; bringing the tax relief on pension contributions for high earners back to the standard rate would bring in £13bn; tackling the tax and national insurance loopholes on City lawyers’ partnerships could be worth £8bn; the failure to tax internet giants is unfair on high street retailers, as noted by Iceland boss Richard Walker; and basing council tax on a property valuation that is more than 30 years old fails to take any account of the huge north-south disparity in house prices that has arisen.
We cannot have good-quality public services without paying for them. Now is the time to look at principles-based fundamental reform, which brings our tax system up to date with the structure of the modern economy, is fair and keeps promises that were made to voters.
Prof Helen Goodman
Department for Work and pensions minister, 2009-10; Treasury official 1980-97
• Have an opinion on anything you’ve read in the Guardian today? Please email us your letter and it will be considered for publication in our letters section.
