Tory leadership contest can spark a much-needed debate on the future of tax

Should the Conservatives slash taxes?

Social media star Liz Truss certainly thinks so, arguing yesterday that "taxes hold back growth, and by cutting rates in a targeted way we can turbocharge economic growth and boost wages so the overall tax burden falls."

Her leadership rival Dominic Raab has also made headlines this week by pledging to cut income tax by 1p year if he is presented with the opportunity to do so, while Sajid Javid has made the moral case for reducing rates.

With the race for Downing Street hotting up, it is little surprise to hear candidates appealing to the Tory membership in the most obvious way possible. However, splits remain within the party over the correct fiscal direction to adopt – both economically and politically.

For a start, there are people such as chancellor Philip Hammond who insist the party must occupy the centre-ground abandoned by Jeremy Corbyn, and thus avoid being depicted as tax-slashing ideologues. Spreadsheet Phil yesterday urged his party against making "reckless" cuts to tax and regulations.

Then there are Tories who believe in symbolic, politically-popular cuts (such as Raab's), and those who would prefer more technocratic but less popular cuts aimed at boosting growth.

Today, conservative think tank Onward proposes a series of cuts that fall into both categories. In the first category, Onward proposes an NI threshold hike for workers with children, alongside a lift in universal credit for the poorest working families. In the second category, it calls for a 50 per cent increase in capital allowances and a corporation tax rate of just 12.5 per cent.

Onward – which boasts a number of Conservative MPs and peers on its advisory board – is even calling for greater spending, urging the government to "turn on all the taps".

How would such largesse be funded? Here we find another split, between hawkish Tories determined to reduce the government's historically-high level of debt, and those – like Onward – who believe deficit reduction has gone far enough.

Such divisions are not a bad thing. On the contrary, it is heartening to see the leadership contest spark a lively debate about the direction of the party's next manifesto. The Tories adopted depressingly policy-lite campaigns during the last two general elections, the second of which spectacularly backfired. Next time, the public deserves to see a clear set of measures that the Tories believe will boost the country post-Brexit.