The recent U-turn on cutting the top rate of income tax has shown that even a government willing to “do unpopular things” to grow the UK economy is constrained by the need for public support.
The negative public reaction to chancellor Kwasi Kwarteng’s September 23 mini-budget came in part from its impact on Britain’s economy. But even before the financial market reaction, the design of the Conservative fiscal plan shows Truss believes that getting the right set of economic policies for growth means paying less attention to public opinion about taxes.
Certainly, governments need to raise revenues, and cutting taxes is often politically advantageous. But the popularity payoff in terms of “bang for buck” varies because some taxes are more popular among voters as a way to raise revenue than others. Cutting the most hated taxes, therefore, should deliver more of an electoral boost than cutting those that are more popular.
