Institute of Economic Affairs unveils £75 billion tax-cutting plan

The Institute of Economic Affairs (IEA) has released a £75 billion tax-cutting ‘Alternative Budget’ ahead of the Chancellor’s upcoming budget. The proposal aims to reshape the tax system by reducing taxes on employment, property, and trade while broadening the VAT base to focus on consumption.

Key measures include cutting income tax and employee National Insurance, which would save a typical worker earning the median wage approximately £644 annually. When including a proposed £21 billion reduction in employer National Insurance, the total tax burden on a median-paid job would decrease by roughly £1,300 per year. The plan also suggests abolishing stamp duty and inheritance tax.

To fund military commitments, the IEA proposes introducing new Defence Bonds available through stocks and shares ISAs. These bonds would allow savers to invest directly in national defence with ring-fenced funds. The proposal is accompanied by calls for tighter welfare spending and reforms to planning and regulation.