Budget another missed opportunity to put the nation's finances back on track

March 16, 2016 3:07 PM

Responding to the Budget statement given by the Chancellor of the Exchequer, Jonathan Isaby, Chief Executive of the TaxPayers' Alliance, said:

"The Chancellor yet again delivered a mixed bag of measures which will do very little to address the state of the public finances. While taxpayers will welcome tax cuts like the rise in the personal allowance which will leave more money in people's pockets, measures like the regressive Sugar Tax will penalise families already struggling with the cost of living. The Budget needed to include far more concrete measures to ease the enormous pressure on taxpayers and create a simpler, more competitive tax system."

On the new Sugar Tax, he continued:

"It is ludicrous that the Chancellor decided to cave in to the demands of the high priests of the nanny state in the public health lobby and introduce a hugely regressive and entirely ineffective sugar tax. This will hit the poorest families hardest and all evidence shows it simply won't work."

On Income Tax, he continued:

"The increase in both the personal allowance to £12,500 and the higher rate threshold to £50,000 were already pencilled in for the end of the Parliament, but the chancellor is right to accelerate progress towards this goal. By the end of the Parliament there will still be far more people paying the 40p rate of income tax than there were when it was first introduced. Bolder action is needed to reverse the impact of years of the higher rate threshold not rising in line with earnings, and being cut substantially in the last Parliament."

On the cost of living, he continued:

"Freezes in some cider, beer and spirits duties is good news for taxpayers, particularly those on low incomes, but it would have been better to freeze Alcohol Duties across the board. Likewise, tax currently makes up three quarters of the price of petrol and any rise in fuel duty would have been very painful, so taxpayers will be pleased that the Chancellor froze it. However, raising Insurance Premium Tax will make family holidays even more expensive and the Sugar Tax will squeeze weekly shopping budgets. Tax remains the greatest cost of living and the Chancellor should not have made it made it even worse."

On savings, he continued:

"Both the “Help to Save” and “Lifetime ISA” schemes offer significant taxpayer top-ups to low income working households and the under 40s, but the reason these groups struggle to save in the first place is because the cost of living, especially tax, is far too high. It makes little sense for the chancellor to heavily tax these groups, only to hand back some of it in arbitrary savings subsidies – he should have just cut taxes instead."

On reining in spending, he continued:

"While there are some welcome spending reductions in this Budget, the brave and bold action that is needed to balance the nation's books was sadly absent. Yet again the Chancellor has missed his target of starting to cut the national debt as a proportion of GDP in this financial year, and we might not see this happen by the middle of the Parliament. Despite the tough talk, the truth is that spending has not come down quickly enough and spending projections set out in previous budgets have slipped, leaving taxpayers to pick up bigger bills. Every Budget in which spending isn't brought under control, has to be seen as a missed opportunity."

On tax simplification, he continued:

"Tax complexity is a huge problem and this Budget will make it worse with a torrent of new thresholds, allowances and rules for Corporation Tax and Income Tax. These measures make sense individually but are the last thing our 21,000-page tax code needs. The Chancellor needs to take bolder action, especially on Stamp Duty, Corporation Tax and Capital Gains Tax."

On business taxes he continued:

"Because all taxes ultimately fall on people it rarely makes sense to hide them in so-called business taxes. So cuts in Capital Gains Tax, Corporation Tax and Business Rates will encourage investment and create jobs and prosperity. But restrictions on loss reliefs and the Sugar Tax detract from this progress, however. Britain needs bolder tax reform, including abolishing Corporation Tax and Capital Gains Tax and replacing them with a Single Income Tax."

TPA spokesmen are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

 

Latest Blogs:

The sugar tax and the public finances

6:00 AM 05, Dec 2016 Harry Fairhead

Working for the taxman

6:00 AM 26, Nov 2016 Harry Fairhead

Further thoughts on the Autumn Statement

4:56 PM 24, Nov 2016 James Price