Professor Patrick Minford, one of the most influential economists of the Thatcher era and a leading Brexiteer champion of free trade, has laid out proposals for a major overhaul of the tax system but fears Mr Sunak is being urged to hike taxes and slash spending. He said: [We] are already hearing very bad advice being given to the Chancellor, mostly from Remainers who have less interest in the economy’s success, as they will use its failure to say ‘I told you so’.”
In his new book, “After Brexit, What Next?”, Prof Minford makes the case for the standard rate of income tax to be “cut to a 15% flat tax rate on consumption”.
The economist insists such tax reform will be popular because “there are no losers, no cutback in public spending programmes and many gainers”.
He states: “Taxes can be cut without being balanced by simultaneous cuts in spending because extra work, less avoidance and higher growth create an offsetting growth in revenue over time.”
Meanwhile, Conservative MP Kevin Hollinrake will this week introduce a Bill to abolish business rates.
He said: “I want to just get rid of them. The thing is, they were designed for a different time.
“They are completely outdated. They are designed for a time when most businesses had to trade from premises and that is not the case now.”
The Thirsk and Malton MP points out that it is not just retailers that increasingly operate without a high street presence but also estate agents, solicitors and food delivery services.
He said: “Our job as parliamentarians [should] be about setting a fair and level playing field [and] business rates distort competition and drive businesses out of business in our precious high streets. The least we can do for them is give them a playing field.”
Mr Hollinrake argues it would be a “disaster” to introduce an online sales tax but argues the Treasury could make up for the lost income from business rates by increasing VAT from 20p in the pound to 23p.
Professor Len Shackleton of the Institute of Economic Affairs had concerns about increasing VAT but said business rates were today a “huge and unavoidable burden on many types of shops and service businesses which cannot operate normally or are facing much reduced turnover”.