There is no current consensus in the steps that government should take to pay for the costs of dealing with the coronavirus crisis.
Pre-pandemic, in any discussion on tax policy, it would have been easy to state that Labour would advocate tax hikes for the wealthy and the Conservatives would want tax cuts to stimulate the economy. Current commentary ranges from tax cuts, austerity and expanding public spending.
To date, the Chancellor has hedged his bets with regard to tax policy. There have been leaks about a VAT cut, a comment early on about increasing the national insurance rates paid by the self-employed, but no further clues have been forthcoming from the Treasury as to what it might do.
The Centre for Policy Studies, the Conservative Party think tank, has just published a paper by Sajid Javid, the former Chancellor, in which he calls for a ‘more progressive taxation of property and tightening tax reliefs which unduly favour the wealthy’. He also suggested that the government should minimise the amount that is taken out of pay, although noting this would put the manifesto promise of not increasing taxes under pressure.
But does this signal a marked shift in Conservative thinking with regard to tax policy? The former Chancellor makes the point that the current council tax structure undercharges wealthy homeowners in London and the South East at the expense of northern regions. He also points out the pension tax relief system primarily benefits the wealthier and the suggested overhaul would result in the well-off losing much of their current pension relief entitlement.
A couple of ideas which will increase the tax paid by the better-off does not signal a U-turn in Conservative tax policy. It is, however, fascinating to see how the Conservatives are grappling with resetting the agenda on tax policy and how they will present tax grabs from wealthier individuals. We might not have too long to wait with Rishi Sunak delivering his fiscal statement on 8 July.