• The word that is absent from the lips of our Chancellor is growth. It is almost as if he fears it. Growth is not a dirty word. It is the key to Britain’s economic recovery. Let’s start with VAT.
The one major act on taxation from George Osborne was to raise VAT to 20 per cent at a time when the high street was already dead on its feet.
Might it not have been better to have cut the bloated overseas aid budget or indeed the £45million a day that we pay to Brussels? Increased VAT has hit growth. higher taxes always do.
All the lessons that we learnt in the eighties appear to have been forgotten. If you cut tax rates, people work harder and end up paying more tax. People need incentives to get off benefits and back into work. If we raised the tax free allowance to £12,000 nobody on the minimum wage would pay tax.
At the other end of the income scale we must scrap the 50 per cent tax rate for higher earners. This is as much a moral as a financial step.
The tax rate exists as retribution for the Left but to entrepreneurs and the business community it sends a negative message: Britain punishes success – do not do business here.
And some honesty about national insurance would be nice.
For individuals it is just income tax and for employers, NI is simply a tax on jobs. George Osborne insists that Britain is a safe haven for people to invest in because we are reducing the deficit.
No such thing is happening. Government borrowing is still increasing with no end in sight.
What Osborne should also be worrying about is the number of people who seek offshore tax havens for both personal and corporate tax. Experience shows the best way to deal with this is to have competitive, fair tax rates here.
Another way to achieve growth is to free business from a blizzard of red tape, much of it derived from Brussels. Rules that strangle business and especially the small businesses that provide over half the jobs in the UK’s private sector have got to go.
As someone who has run a company, a small enterprise that has actually employed people, I feel that I am in some position to talk about problems facing our business community unlike our current political elite.
Cameron, Osborne, Clegg, Miliband: none has ever had to deal with regulations in their own business because they have never run one.
I doubt they even know that small company bosses spend up to a quarter of their working week just dealing with red tape.
It is not the British Government itself, nor its bosses in Brussels, that will drive Britain back to growth. It is the hard work, risk-taking and enterprise of British businesses that will do so.
Despite the difficulties faced by business there are still 4.8 million small companies in existence.
Between them they employ a staggering 20 million people. Without these people the economy simply wouldn’t function.
They need to be helped and encouraged to create more wealth and jobs.
We must remember that without their taxes we cannot even begin to fund education or the National health service.
The Treasury has just announced the creation of some enterprise zones. They say these will create up to 50,000 jobs.
Among the areas which are to benefit from relaxed regulation and lower taxation will be Liverpool, Sheffield, Birmingham and parts of Cornwall, hampshire and Kent. What about Cardiff? How about Glasgow?
Why can’t the whole of the UK be turned into an enterprise zone?
I’ll tell you why, because to do so would put us at loggerheads with the European Union.
There would be calls of “foul” from Brussels and threats of legal action and fines. Britain cannot act in the interest of its citizens and its future because this coalition is desperate to stay in power, which means that it must keep the anti-growth, anti-business, pro-Brussels Lib Dems onside.
And look at the costs of regulations that come over signed, sealed and delivered from Brussels.
It is estimated by the CBI that just one new regulation, the Agency Workers Directive, will threaten a quarter of a million jobs in the UK: that is five times more than the Government hopes the enterprise zones can create.
Add to this the equality legislation and the devastation caused to women’s employment by the misapplied maternity law.
Look at the impact of other EU derived legislation such as the Climate Change Act.
The Department for Climate Change has conservatively estimated it will increase fuel costs to businesses by 26 per cent over the coming years.
We must not forget Britain’s bigger businesses too. The financial services industry is a vital part of our economy and our biggest single income generator.
It now faces an EU Financial Transaction Tax designed to pay for the eU bail-outs which will cost the UK taxpayer £13billion.
We are in the most serious financial crisis for many years. The biggest single remedy for this is for the Government to help to create a climate where businesses can employ British workers, make greater profits and so pay more taxes.
Growth is the key. Tax reductions and tax incentives are needed for individuals and businesses and the Government ought to be unleashing them now. But the biggest problem is the need to reduce the excessive, often insane regulatory burden.
Tragically we are impotent because of EU power.
The UK economy cannot get much better trapped inside the Euro prison.