Team Rishi is losing the plot on taxes

It would be an ‘electoral suicide note’. It would condemn the party to ‘the impotent oblivion of opposition’. And it would push petrol prices up to eight quid a litre, and mean the electricity grid would have to be turned off at eight every evening to preserve power. Okay, okay, I made the last two up. But to be honest Dominic Raab might as well have thrown them into today’s attack on Liz Truss’s fairly modest plans for cancelling some of Rishi Sunak’s planned tax increases – along with a few more dire predictions as well. In truth, Team Rishi is increasingly losing the plot on taxes – and the hysterical tone of the attacks only serve to illustrate that.

For someone who was once discussed as possible chancellor, Domic Raab does not seem to have a very steady grasp of economics. A leading supporter of Rishi Sunak for the leadership of the Conservative party, he has today launched his side’s most open assault yet on Truss’s plans to cancel the planned rise in corporation tax and reverse the rise in National Insurance. An emergency budget in the autumn that didn’t directly help people, and especially the poorest members of society, cope with rising fuel bills would in his view be an electoral catastrophe – and one that would be massively punished at the next election. Instead, the Tories should back his candidate’s plans for a big package of financial support to get people through the winter.

And yet Raab, to put it mildly, seems a little confused. The main Sunak/Johnson tax rises were not put in place to pay for fuel bill subsidies. Corporation tax was increased to help pay for Covid – the last crisis – and because Sunak argues, with very little evidence as it happens, that higher corporate tax rates, coupled with investment deductions, will be better for the economy. The rise in NI was to pay for increased spending on the NHS and social care.

Truss and her team are simply arguing, quite correctly, that both of those tax rises were a mistake. The corporation tax rise will damage investment, while the NI rise will damage job creation, neither of which will help the UK economy in the short, medium or indeed long term. Simply whacking up corporate taxes to some of the highest levels in the developed world to pay for energy subsidies hardly seems like a recipe for making the economy more competitive. Team Sunak, which has increasingly turned into Gordon Brown on roller skates in its commitment to higher taxes, is not making any sense.

True, we may need increases in benefits to help the poorest pay their fuel bills this winter. But that is surely a separate debate. What is obviously true is that if we have a more competitive economy, and faster growth, we will find it easier to pay for everything, including fuel subsidies if they are needed. It is hard to see how that is ‘electoral suicidal’– no mater how hysterically Dominic Raab tries to argue that it is.