Friday, 10 March 2017

Dare to U Turn Prime Minister

The continuing fallout from the Budget and the increase in NICS is turning out to be a real test for the  Government. I have never understood why U turns are seen as a weakness. They are in fact a sign of democracy in action, of parliament doing what parliament is supposed to do, of governments listening. The Prime Minister and her Chancellor should graciously acknowledge that they made a mistake, that, though they still aim to balance the budget and eliminate the deficit, they will not do so on the backs of the very people this country needs if we are to make a success of Brexit.

Thus far, due to economic necessity, there has been little scope for tax cuts since the Conservatives first took power in 2010. But this does not mean that this should not be a stated aim as it should always be for the party. It is a central philosophy and a clear dividing line between Tories and Labour who are reported to want to institute a massive asset tax grab of the rich to fund a spending spree if they were to win power.

Though this is an extreme example of the Labour approach and one probably confined to the lunatic approach of McDonnell and Chauncey, it is not so very far from what Labour did when in power. Though they talked about prudence and disguised their massive tax increases that is what they did. Stealth taxes were their way of increasing the state. It has not led to an improvement in the economy or of public services and meant that we have a massive and still hard to eradicate deficit.

And since they came to power the Tories, in part because they were initially in coalition with the Lib Dems, have accepted the Brownite approach to tax and spend. They have been terrified of cutting taxes. The ridiculous 45% upper rate remains in place, even though Osborne did dare to cut it from 50%. It should have been eradicated altogether as a statement of intent. The rich already pay their fair share, more than their fare share. The top 1% pay 27% of all taxes. Any attempt to grab more of their assets, on which tax has already been paid, would simply drive out the wealthiest and bankrupt the nation. But lower taxes  improve the economy for everyone, something that lower rates of NICS for the self employed has demonstrated. Self employment is a reaction to the overtaxed, over regulated employment market. It is part of the reason why employment continues to grow in the UK. The so called gig economy is not a bad thing. It is freedom from the stultifying embrace of the state telling employers how much holiday they must give, how much maternity leave, how employers must be sacked and whether they can be sacked at all. Rights for employees if they go too far just lead to fewer employees. They make employers hesitate to take on staff lest they make their businesses too inflexible.

This is the opportunity for the Government, as we prepare for Brexit, to state its approach. Britain is going to be a state that is a low tax, low regulation, business friendly environment. Taxes should be lowered for everyone and certainly not raised on the self employed who are part of the reason that the British economy is motoring ahead of our European rivals. Eradicating the deficit is important but more important is making the economy fit and ready for our new global approach to trade. Instead of rising taxes the Government should be cutting them. It should u turn on NICS immediately and they start cutting when the Chancellor presents his next Budget in November.

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