The government could do with more revenue but will not get it from ever higher taxes

By johnredwood on January 19, 2026

Tax this, tax that. It is all the government wants to do as it stumbles from budget to budget, from OBR forecast to OBR forecast. Tax employing people. Tax family farms. Tax small businesses. Tax motorists. Tax people who save. Tax people who buy food wrapped in hygienic plastic. Tax people who earn more. Tax people who dispose of their waste legally. Tax people for driving battery cars. Tax people more for buying diesel or petrol cars. Tax people with gas boilers. Tax companies with windfall taxes that sell us petrol and diesel. Put VAT on school fees. Tax rich foreigners more. Tax banks more. Tax landlords more. Tax people making capital gains more .

The reactions to this tax attack are predictable. Very rich people move to one of their homes in a less hostile tax jurisdiction and take their savings and businesses with them. Younger people planning to work hard and set up businesses go elsewhere to do that. Employers offer fewer jobs. People are deterred from promotion or working longer hours by the tax traps higher up the earnings scale. People stop buying so many cars. Voters become angry about a government that seems to want to stop them being better off. Consumer confidence falls leading to slower growth and less tax revenue. Landlords stop renting out homes. People with assets hold them for longer to avoid capital gains tax.

No one is happy . The government collects less tax from less activity, and from fewer better off people staying to pay. People are unwilling to take so many risks, to try new things, to build new businesses.

Lower tax rates can lead to higher tax revenues. If we halved our corporation tax rate to match Ireland's we could grow our business base as they have done,. They collect 3 times as much business tax per head as we do with half the rate.

If we lifted the bans on new oil and gas and removed the windfall additional tax, just leaving in place double corporation tax, we would get a lot more tax revenue from the new oil and gas we would be producing for ourselves. We do not get anything like the same tax on all those imports this government prefers.

If we reduced taxes on capital more money would flow into the country, and more domestic savers would create more transactions and jobs as they rearranged their property and share holdings.

Instead of a gloomy outlook based on dividing up a shrinking or small cake, we could have policies that grew the cake giving scope for many more to be better off. More cake would bring more tax revenue. Lower tax rates would assist in faster growth and a better financed public sector.