A word to the Treasury Wise
More tax, less to spend
Rumours are circulating that the UK Government is planning further tax rises, despite warnings from economists and business leaders such as Tesco boss Ken Murphy (see BBC News – Tesco boss warns Reeves against further business taxes). Some have even called them “tax raids”, reflecting growing concern on the ground.
What needs to be understood by tax proponents is simple: more tax means less money in people’s pockets. That applies to spending today (e.g. income tax), in the future (e.g. inheritance tax), or both (e.g. pensions).
Small and medium-sized businesses, which make up the majority of the economy, and low and middle-income individuals are hit hardest. As a small business owner myself, I’m feeling the impact, though thankfully weathering the storm through measures we at Acceler8 Consultancy advise on. Many other small businesses, however, have struggled, as shown by the rising number forced into administration after the National Insurance hike.
The hidden cost of technology
At the same time, big tech continues to withdraw support for older software and operating systems, as Microsoft is doing with Windows 10. Technology like this is no longer optional. A PC, laptop, or mobile phone has become essential, for work, study, shopping, and even accessing government services.
With the decline of the high street and reduced local government presence, these devices are now vital for engaging with the police, the NHS, and local authorities. Yet, for many small businesses and individuals, the cost of keeping up with constant tech upgrades is becoming impossible during a cost-of-living crisis.
Waste and inequality
Consumer groups such as PIRG in the US (see BBC News – Windows 10 users urged to prepare for Microsoft pulling support) have warned about the growing burden this creates. Perfectly functional devices are being scrapped because they can’t run Windows 11, an unnecessary environmental cost as well as a waste of money and resources.
This combined impact on society and the environment is a cost created by big tech that everyone else is forced to absorb. It highlights a deeper imbalance: those least able to pay are often the ones paying most.
A smarter way to tax
Basic economics teaches that tax isn’t just a way for governments to raise revenue, it’s also a tool to correct market imbalances when societal or environmental costs go unaccounted for and to create fairness, as the Institute for Fiscal Studies (IFS) has said (see Rachel Reeves should avoid ‘half-baked’ tax fixes in Budget, says IFS – BBC News).
So, here’s a word to the Treasury-wise: as you seek to plug gaps in government finances, don’t increase direct taxes that reduce the spending power of most businesses and individuals. Instead, focus on those who create costs for society and the environment, costs that limit spending power for everyone else.
That would be a win–win–win for government revenue, society, and the planet.
