Tax rises, not tax cuts, could be the government’s get out of jail free card

In a small corner of the Westminster bubble, certain figures on the Right of politics are waging a relentless campaign to ‘slash the tax burden’. Given the voracity of support from a Trussonomics aligned coterie, you could have been forgiven for thinking that there is a great swell of popular opinion behind this idea. However, new research reveals that simply isn’t the case. When the public is asked about solutions to the cost of living crisis, they don’t want tax cuts.

The research The Bottom Line has been published by the steering group of the Stop the Squeeze campaign, of which Tax Justice UK is a member. The report is a deep dive into public opinion on the cost of living crisis and how it is shaping voting intentions. The overwhelming message: tax cuts are a red herring. Amongst a list of policy interventions the government could make to tackle the cost of living crisis, income tax cuts came sixth, losing out even to a tax cut on goods and services. The clear winner was further action on energy bills, which was chosen by 58% of respondents.

The polling pinpoints the views of the crucial swing voters at the next election – dubbed ‘Stevenage Woman’ and ‘Workington Man’. Here the story is the same. Only around one in five voters in each group chose tax cuts as a priority for cost of living action. The only segment that scored significantly higher was the core Conservative vote group ‘the Rural Right’, where 40% of respondents opted for income tax cuts, still only making it the third most popular intervention. 

If politicians want to win votes on the cost of living, they should in fact be looking at tax rises not tax cuts. There is strikingly strong support for tax rises if they are targeted at those with the broadest shoulders. When asked how extra cost of living support measures should be funded, the response was overwhelming; voters want additional cost of living support to be funded by taxes on those with the highest levels of wealth and income. This option was over ten times more popular than any other funding mechanism we tested. It was by far the most popular option with current Conservative voters scoring 46% with the next most popular option (additional borrowing) scoring only 11%. It was very popular with swing voters, especially ‘Workington Man’ voters where it scored a huge 76%.

Politicians should read the room: the public expects serious solutions to the cost of living crisis. It is the key issue that will determine the next election, yet voters do not currently believe either main party is prioritising it enough. There is a gap in the market for a serious retail offer on the cost of living, but if either party wants to speak to crucial swing voters, they won’t do it by promising more tax cuts.

Overwhelming public support shouldn’t be surprising to anyone who has studied public opinion on taxing the wealthy. All our research has shown wealth taxes to be a hugely popular policy option, with growing momentum. Any incoming government is facing some tough and unavoidable realities: public services must receive investment if the next government wants a second term. Yet, working people cannot afford to contribute more, squeezed by both the cost of living crisis and recent tax rises. While borrowing will offer part of the solution on the capital investment side, it cannot fund our day to day services that so urgently need repair. Meanwhile, growth and productivity gains cannot be banked on to materialise quickly enough. Facing this conundrum, raising taxes on those who can most afford to contribute, offers an incoming government their only realistic get out of jail free card. 

The public knows that there are very, very rich people in the UK, with more wealth than they could spend in ten lifetimes. Yet ordinary people are the ones being expected to tighten their belts. Taxing the wealth of the super-rich could provide £50 billion in funding for public services. These policies also have the weight of academics, economists and think-tanks (from both sides of the aisle) support behind them. It’s the common sense solution staring politicians in the face.  

Tax cuts will undoubtedly continue to be promoted by a government looking to appease its unruly backbenchers. But voters who are feeling the squeeze are crying out for spending on policies that reduce the spiralling costs they face, financed by raising taxes on the wealthy. Unlike tax cuts, this kind of policy is also less likely to add demand to the economy and further fuel inflation. If the Conservatives go into the election promising another tax-cutting bonanza, they should do so knowing they are pursuing a strategy focused on their base, rather than a serious attempt to win over swing voters. For Labour, it has never been clearer that they should resist the temptation to fall into the trap of matching any promises, and focus on delivering improvements to people’s lives, paid for by fair taxes.  


For more on how Labour can rebuild Britain’s public services, see No More Sticking Plasters: Labour’s Health Mission.