Budget doesn’t do enough for growth

Reaction to today's Budget

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

“As a budget that was intended to be about encouraging growth, this is a disappointment. Even on the areas where the Chancellor is doing the right things, his reforms are tiny. He committed himself to simplifying tax rules, but has only eliminated 100 pages from our 10,000 page tax rulebook and has added many more.

“He stated a desire to relieve business from the burden of regulation. But even on his own numbers, the burden is only being decreased by 0.4%. That’s not a slashing of red tape. It’s barely even a trim.

“The 2% reduction in corporation tax is a welcome step. As is the change to income tax thresholds. But these are small crumbs of comfort – what the country really needs is much lower taxes across all areas and much less regulation.”

Philip Booth, Editorial Director at the Institute of Economic Affairs, said:

“When it comes to promoting economic growth the coalition's inheritance was grim; regulations imposed in the last 13 years cost the economy £90billion a year; we have the longest tax code in the world; and taxes have been rising rapidly. The action that the government has taken – especially with regard to corporation tax – is welcome but nowhere near the scale of what is required.  

“The budget is perhaps summed up by the measures for small business employment regulation – there will be a moratorium of new regulation for three years. This will not apply to EU regulation and will not roll back existing regulation – there will simply be a pause, for some businesses, in the imposition of new regulation.

“The government has also failed on important areas of transparency. Direct tax allowances are going to be indexed to the CPI whereas indirect taxes will continue to be indexed to the more rapidly rising RPI – with the taxpayer losing out. Furthermore, the Chancellor announced that public sector pension liabilities and contributions will be calculated using artificial interest rates thus continuing to hide the true costs of these obligations from taxpayers.”

 

To arrange an interview with Mark Littlewood, IEA Director General or Philip Booth, IEA Editorial and Programme Director, please contact Ruth Porter, Communications Manager, 077 5171 7781, 020 7799 8900, rporter@iea.org.uk.

 

NOTES TO EDITORS

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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