Budget 2012 includes welcome steps to growth, but some traps too

The IEA responds to the Budget

Responding to today’s Budget, Mark Littlewood, Director General of the Institute of Economic Affairs, said:

“Overall, this is a fiddly, piecemeal budget. It includes some welcome steps but much of the devil is buried in the detail.

“George Osborne should be commended for cutting the 50p rate, increasing the personal threshold and accelerating the reduction in corporation tax. These steps will encourage enterprise, stimulate growth and reward work.

“Introducing greater transparency for 20 million taxpayers about how their money is spent could produce much greater pressures for considerably less state spending amongst the wider electorate.

“The promised liberalisation of planning laws and move towards regional pay bargaining in the public sector are also welcome.

“However, the Chancellor is developing an unhealthy habit of lambasting the very affluent. The United Kingdom doesn’t need more taxes, it needs more taxpayers. We need a tax framework which attracts more millionaires to these shores rather than falling for the myth that we can all live at the expense of the super-wealthy if we only squeeze them hard enough.

“The stamp duty hike for expensive homes is an unnecessary measure. Closing loopholes around foreign companies purchasing domestic properties closes off an anomaly, but will not raise substantial funds.

“If we are serious about encouraging hard work, we should be very concerned that many hundreds of thousands more people will be caught by the 40p rate of income tax

“The government deficit reduction strategy has already drifted off target and relies on rather optimistic growth figures over the next few years. The Chancellor should seek to find greater reductions in state spending to allow for substantial, across-the-board tax cuts before the end of this Parliamentary term.”

 

Notes to editors

If you wish to arrange an interview with an IEA spokesperson please contact Ruth Porter, Communications Director at the Institute of Economic Affairs on 077 5171 7781 or rporter@iea.org.uk.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.

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