Time to rethink tax hikes and net zero targets?

The idea of a tax hike and ambitious net zero targets may have looked attractive post-COVID and pre-Christmas. But with the cost of living crisis biting hard, inflation running amok, and Vladimir Putin throwing the world into crisis, Frank McKenna is urging the government to rethink its plans.

Frank McKenna

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If timing is everything, then maybe the government needs to urgently review its plans over two of the key policy positions it took in the latter half of 2021.

In the expectation that the economy was going to bounce back strongly post-COVID, the chancellor announced that a 1.5% National Insurance increase would be implemented in April. Surely, world events, plus the fact that the budget deficit is undershooting the forecast for this financial year by £18 Billion, gives Rishi Sunak the headroom to delay that planned tax hike.

Last year, to almost universal approval, world leaders met for the much-trumpeted COP26 and signed off hugely ambitious net zero ambitions.

The UK, without any genuine strategy for transitioning from its reliance on energy imports, its failure to reinvest in nuclear, its refusal to allow fracking, and the lifting of the energy price cap, is now facing unprecedented fuel costs.

At the very least, the 16% ‘green levy’ on energy bills should be paused to help struggling families and businesses, but in the real world a more balanced debate about how we adopt a more pragmatic energy and environmental strategy moving forward would be most welcome.

Sanctions on Russian oil will hurt Putin’s murderous regime almost more than any other measure – but is the UK and its western allies in a position to impose such measures, given the tightness of the global market and the scarcity of alternatives?

For too long we have been under the delusional impression that we can virtue signal, satisfy every populist campaign going, remove ourselves from our biggest trading market, and have zero price to pay. COVID, the potential of a World War, and the realisation that our ‘friends’ in the East are not as reliable and stable as some had thought, should mean new thinking and a new approach from the government. There may be a time when we can increase taxes and be ambitious in our net zero plans. That time is not now.

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