If there are to be sweeping tax cuts then raise the personal allowance

So it is said there are to be sweeping tax cuts. At which point, well, which taxes should be cut how hard?

The correct answer, we insist, is simply to take people out of the tax net altogether. As with Nigel Lawson’s gleeful aim of abolishing a tax each budget. Don’t lower a tax rate, kill a tax that is in his ambition.

Liz Truss suggested further sweeping tax cuts were on the way as she put economic “freedom” at the heart of her premiership.

The Prime Minister gave a heavy hint that she would go much further than reversing the rise in National Insurance and cancelling planned increases in corporation tax, with cuts to income tax and VAT potentially in the frame.

She told reporters there was “no doubt” in her mind that tax cuts promoted economic growth, saying her government would be looking at tax rates across the board.

So, to repeat something we started saying near two decades back - and which did work, until inflation caught up with it again. Reverse fiscal drag.

We shouted for a number of years that the personal allowance for income tax and national insurance should be the same - at minimum - as the full year, full time minimum wage. On the very simple grounds that the entire claim of the minimum wage proponents is that there is some minimum amount labour is worth. No, we don’t agree - that minimum is £0 - but within the debate as framed that this is the minimum allowable does mean this shouldn’t be taxed directly.

That personal allowance has risen to £12,500 now - which is what the full year, full time, minimum wage was back when the ambition was announced, in 2010.

So, the tax cut now should be to do the same. Further, to nail the two together. The minimum wage is the personal allowance, the personal allowance is the minimum wage. The Chancellor wants to change one of those two then the other must also be changed. The advantage of this is that a politician giving away other peoples’ money in a wage rise might think a little more if it makes collecting his tax money more difficult too.

But the base logic here - minimum wage is tax free allowance - makes perfect logical sense to us. Simply because what is the argument for a minimum wage other than this is the minimum amount people should be getting? So, why does the bureaucracy get dibs on it?