ED MILLIBAND came out aggresively at the end of George Osborne’s second Budget questioning in histrionic form the chancellor’s claim that was a Budget for growth. He taunted Osborne with the claim that the economy was ‘down, down, down’.
The tax measures alone give some food for thought. 2011/12 will see around £800m ploughed back into the economy, or tax savings under the government’s ‘enterprise and growth’ plans from the Budget.
Is that a big some? Compare that to the tax take from closing down a single avoidance area, disguised remuneration – £750m this year, and the figure doesn’t seem to be very large.
But also place it in the context of the revised growth estimate. 2011 will see a 1.7% rise in GDP instead of 2.3%. That’s bad news and will see the economy along a little more than we otherwise expected.
So is the £800m tax boost enough? Probably not, but the plan for the economy cannot be judged on that alone.
In addition to the tax cuts, including slashing the corporation tax rate, the chancellor also plans an expansion of enterprise zones a green bank and hopefully improved lending from the banks.
Today he did start to sound more enthusiastic about promoting growth. And out with the Budget papers came The Plan for Growth, Osborne and Vince Cable’s blueprint for getting the UK back on track. Much of this we have heard over the past few weeks.
But they have articulated a four point strategy. Make the UK the most competitive tax regime in the G20; make the UK the best place to start and build a business; to encourage investment and exports and the UK a more educated workforce.
The question will be whether the policy measures will meet these strategic aims, that is, of course, a more difficult task than to write the strategy.
In being competitive on tax, the issue will not necessary be a better corporation tax rate. It’s around certainty and simplicity. The Office of Tax Simplification is making a start on that.
In the end though, it will be about confidence. Without that, people will not buy, companies will not invest. And that may just hang on starting to meet the growth forecasts. This one has been missed. The next one will be critical if Osborne is to be viewed as a man with a plan.
Milliband got the best of the name calling in the House of Commons today. It is yet to be proved whether he has called the economy right.
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