Rishi Sunak should cut tax as the current burden makes the UK “non-competitive”, Ronald Reagan’s former economic aide has claimed.
Dr Arthur Laffer, 83, who also advised Margaret Thatcher, suggested the Prime Minister and his Chancellor Jeremy Hunt should reduce income tax to spur economic growth.
Sunak and Hunt rejected calls from Conservative colleagues to reduce the tax burden during Tory Party Conference in Manchester.
The pair instead repeatedly pointed out how reducing inflation was the best form of cutting costs.
Inflation dropped to 6.7 per cent in August, a rapid decrease from its peak of 11.1 per cent last October.
However, the tax burden is expected to hit 37 per cent as a share of GDP by the next general election, a four per cent increase since 2019.
The overall share represents the highest figure since the 1940s but is not particularly burdensome by international standards.
Britons pay more than Switzerland and Ireland but less than the Germans, French and Scandinavians.
Commenting on the UK’s ballooning tax take, Dr Laffer told GB News: ”I think they [Truss' allies] are completely right. Kwasi Kwarteng is the right person to go to if you want a tax expert, much more than Liz Truss … I think you need to really do a very major cut in the highest marginal income tax rate if you want to survive.”
Chancellor of the Exchequer Kwasi Kwarteng leaves 11 Downing Street, London
PA
The so-called Father of Supply-Side Economics added: “You are non-competitive in many ways in Britain and you also have many problems beside taxes, as you know.”
Taking aim at Sunak’s Tories, the 83-year-old argued: “You find yourself having a Conservative Government that is not conservative.
“You’re going to lose to a Labour Government that is Labour. And you’re going to have really problems long term. Why do you want to put yourself through that?
“Do you really think it’s good for your country to have high unemployment, high inflation, a weak currency?”
“I’m not saying that Liz Truss behaved in the proper way there but Rishi [Sunak] is not even close to Kwasi [Kwarteng].
Prime Minister Rishi Sunak delivers his keynote speech at the Conservative Party annual conference at Manchester Central convention complex
PA
“Rishi is a very nice man, he knows my family well and he’s a very pleasant, wonderful guy, but he isn’t doing a good job on the economics of Britain.
“He’s very good personally on economics, he’s made a fortune on his own, he’s done really, really well, just the dream of what a British worker should be able to do in life but he doesn’t know how to run a Government.”
Laffer instead suggested the United Kingdom should follow the Irish tax model, particularly on lowering corporation tax.
He explained: “You should be doing just what Ireland is doing and just the opposite of what Scotland is doing.
Liz Truss staged a major intervention on tax cuts
GB News“You should be a pro-growth, free-market, economic development agenda in your country.”
Sunak is facing pressure from a number of backbench MPs to cut tax ahead of the next general election as Sir Keir Starmer’s Labour Party continue to streak ahead of the Conservatives.
The Liz Truss-aligned Conservative Growth Group has around 60 MPs backing its tax-cutting agenda.
Truss, who lasted just 49 days as Prime Minister, continued to call for tax cuts despite her disastrous mini-budget last autumn.
Speaking at the ‘Great British Growth’ rally, Truss called for a slash in corporation tax from 25 per cent to 19 per cent.
Levelling Up Secretary Michael Gove, who often heaps praise on Sunak and Hunt, also voiced his support for reducing the tax burden by the time of the next election.
