There have been relatively few Budget leaks ahead of next week’s fiscal event but the little we have been able to discern, while still technically in the realms of speculation, has been depressing. The latest suggestion – that people handing over the reins of a family business to the next generation could be hit with an almighty tax bill – is so absurd that it surely cannot survive beyond the “no idea’s too crazy” Treasury brainstorm.
Meanwhile, interest groups left, right and centre have been making the case for or against various tweaks, levies and reforms. The principal business groups have coalesced around a “please do no harm” lobbying strategy, with some specific calls to lower the burden of costs and make it easier to hire young people. The City’s campaign against a tax raid on the banks was valiant but the smart money’s on them taking a beating. The politics of taxing the glass towers of Canary Wharf in order to give “breathing space” to the crumbling high street is just so perfectly Burnham.
As if to prove the point, trade union Unison – “defending the rights of all workers across local government” – will today release polling showing huge public support for further taxes on the banks, as well as on “the wealthiest individuals…and large corporations.” To be fair to Burnham and Healey, they don’t appear to be in the mood for sweeping wealth taxes but their desperation for additional revenue is leading them down some dangerous paths.
Inspiration for the Budget
It seems the PM won’t be able to bring his whole self to work without a new mandate from the electorate, and if (as he prepares to tell us more about his ten year plan) he’s after some inspiration I suggest he digests the alternative Budget published this week by the Institute of Economic Affairs. He may recoil from its whiff of radical free-market ideas but the proposed policies are bold and deserve a hearing.
The think-tank advocates, for example, a dramatic extension of VAT at 20 per cent across a range of goods and services currently benefiting from VAT exemption or reduced rates. The aim is to shift taxation away from transactions and towards consumption. The revenue generated by wholesale VAT reform could be used to scrap Stamp Duty and Inheritance Tax. The document also proposes some dramatic but sensible reforms to welfare spending and some dynamic but progressive reforms to income tax.
Oh, and for good measure they make the case for scrapping the Bank Levy and Bank Surcharge. Just don’t tell the unions.