The Bow Group: Statement on March 21 Budget

"George Osborne's budget makes the UK a better place to start in business, to start a business and to succeed in business than it was yesterday."The Bow Group supports the key planks of George Osbornes budget but raises concerns over the rising cost of living and the government's continued commitment to international competition, infrastructure, investment and growth. Bow Group Chairman Ben Harris-Quinney said: "Efforts to encourage growth by reducing corporation tax, cutting tax on executive pay, and removing taxation on those earning less than £9205 all make this country a better place to start in business, to start a business and to succeed in business than it was yesterday.Though in my view less significant than cuts to corporation and low-pay tax, the most politically contentious issue of the budget is without question the reduction of the 50p tax rate. Even a cursory understanding of laffer economics reduce Ed Miliband's arguments to the opportunism of punch and judy politics. At 45% HMRC are clearly saying the net to the public purse in tax revenue will be considerably more than at 50%, and even at 45% its still a higher rate of tax than France, Germany and the US. There is no argument here but that of sentimentality. We are however concerned that enough attention is still not being paid to the ever rising cost of living and the range of stealth taxes that contribute to that cost. The recent announcements that rail fares are set to rise significantly, that new road tolls are being considered and the rises in an already prohibitive stamp duty can only serve to stagnate growth. Particularly the announcement that a further a 3p fuel duty rise will come into effect from 1st August and the reaffirmation that the Alcohol Duty Escalator will continue to push alcoholic drinks prices up at 2% above inflation will be another drain on national disposable income. Broadly the inflating cost of day to day living, food, fuel, transport, will have a bigger impact on people's lives than any specific policy in the budget. Infrastructure will form a key part of any government led efforts to facilitate growth, and whilst there are concerns that the government are doing enough to ensure cheap and efficient road, rail and broadband capacity, the announcement that the expansion of the UK's airport infrastructure in the South East is to be explored is both welcome and overdue. If our economy doesn't grow, it won't matter if we are taxing everyone at 0% or 100%, we still won't shift the deficit. So, whatever the budget, beyond responsible capitlism and rates of executive tax, the statement, 'its the growth, stupid', applies now more than ever" Please see the latest Bow Group paper "Remuneration Nation" here.
Wednesday, March 21, 2012