The study from the TaxPayers’ Alliance (TPA) sets out five key tax changes that should be made immediately.
:: Abolish employer national insurance, cutting a typical business’ payroll tax bill by 38 per cent this year.
:: Abolish employee national insurance, meaning an average worker would pay £1,622 less tax this year.
:: Abolish capital gains tax, which according to the Fraser Institute can grow an economy by up to 3 percent.
:: Increase the annual corporation tax investment allowance to £5million, which would catapult the UK to the top of the OECD’s rankings for the best treatment of fixed capital investment.
:: Raise the Stamp duty land tax threshold to £1million, unlocking 220,000 home moves, the equivalent to the total dwelling stock of Manchester, Leeds or Bristol.
Boris Johnson has indicated that a return to the austerity of the Cameron-years is not on the agenda.
However, both he and Chancellor Rishi Sunak have refused to rule out tax rises for millions of workers to help pay for the crisis which has left Britain teetering on the brink of an historic recession.
The Treasury is understood to be looking at bringing an end to the triple lock on state pensions and a two-year freeze on pay for nurses, teachers and police as part of a menu of options to balance the books.
But the TPA report, which has the backing of Cabinet Minister Lord Lilley, argues for bold, powerful action to reinvigorate the economy in the aftermath of the virus.
Its plans would amount to tax cuts worth £100 billion this year, falling to £51billion next year.
The campaign group’s proposed jobs and investment measures could cut the average wage bill by 38 percent, put £1,622 in workers’ pockets and boost economic growth, capital investment and the housing market.
Former secretary of state for trade and industry, Lord Lilley, said: “It is vital to switch the focus from the costs of shutting down the economy to stimulating recovery as we move out of lockdown. Thank heavens the TaxPayers’ Alliance are proposing bold tax cuts to boost the recovery.
“My priorities would be measures which bring forward economic activity, like the proposed increase in investment allowances so that we don’t tax companies when they invest in machinery and factories, but only when their investments generate a profit. Slashing stamp duty, which is a punitively high levy on the cost of moving home, and cuts on employers national insurance contributions to encourage them to take on employees, will do wonders for jobs and productivity.
“Some of these changes should be on a time limited basis, to limit the cost and encourage people to bring forward expansion plans. But either way, bold tax cuts are exactly what Britain needs.”
John O’Connell, the chief executive at the TaxPayers’ Alliance, said: “Now more than ever, Britain needs tax cuts, not taxpayer austerity.”
“With the economy on its knees and millions facing unemployment, trying to tax our way out of it would be madness. But bold reforms could slash the cost of hiring, boost pay packets and drive a wave of investment which would power up economic growth and kick start the housing market.
“By reducing the most economically damaging taxes now, the chancellor can avoid a deep depression and wave of unemployment by protecting taxpayers and businesses in the recovery.”