TPA responds to today’s GDP figures

July 25, 2012 12:56 PM

Commenting on today’s announcement that the economy shrank by 0.7 per cent in the second quarter of 2012, Matthew Sinclair, Director of the TaxPayers’ Alliance, said:
“Yet another quarter of economic contraction is dismal news for families already struggling to make ends meet. The evidence doesn't support those blaming Britain's economic woes on cuts in government spending though, as the Government and other services category actually expanded in the quarter. The most immediate problem is in the ailing construction sector. While public sector capital spending is set to be cut relatively sharply, the real problem is market uncertainty being compounded by new taxes like empty property rates, which massively increases the risk for investments in commercial property, and Section 106, an increasingly punishing tax on new developments. If the Government are serious about making the health of our economy their top priority, then they need to deliver a less onerous tax system, which doesn't get in the way of the investment that can deliver more jobs and higher wages.”


The recommendations in the final report of the 2020 Tax Commission from the TaxPayers' Alliance and the Institute of Directors, the Single Income Tax, are:

1. Taxes should be cut to 33 per cent of national income
2. Marginal tax rates should not exceed 30 per cent, and the personal allowance should rise to £10,000
3. Taxes on capital and labour income disguised as business taxes should be abolished and replaced with a tax on distributed income
4. Transaction, wealth and inheritance taxes should be abolished
5. Other consumption taxes need to stay for now, but transport taxes should be cut
6. Local authorities should raise half of their spending power from local taxes





According to econometric modelling by the Centre for Economic and Business Research (Cebr), a leading economics consultancy, implementing those proposals would increase GDP by 8.4 per cent over 15 years - equivalent to an additional £5,000 per family in 2012-13.
Commenting on today’s announcement that the economy shrank by 0.7 per cent in the second quarter of 2012, Matthew Sinclair, Director of the TaxPayers’ Alliance, said:
“Yet another quarter of economic contraction is dismal news for families already struggling to make ends meet. The evidence doesn't support those blaming Britain's economic woes on cuts in government spending though, as the Government and other services category actually expanded in the quarter. The most immediate problem is in the ailing construction sector. While public sector capital spending is set to be cut relatively sharply, the real problem is market uncertainty being compounded by new taxes like empty property rates, which massively increases the risk for investments in commercial property, and Section 106, an increasingly punishing tax on new developments. If the Government are serious about making the health of our economy their top priority, then they need to deliver a less onerous tax system, which doesn't get in the way of the investment that can deliver more jobs and higher wages.”


The recommendations in the final report of the 2020 Tax Commission from the TaxPayers' Alliance and the Institute of Directors, the Single Income Tax, are:

1. Taxes should be cut to 33 per cent of national income
2. Marginal tax rates should not exceed 30 per cent, and the personal allowance should rise to £10,000
3. Taxes on capital and labour income disguised as business taxes should be abolished and replaced with a tax on distributed income
4. Transaction, wealth and inheritance taxes should be abolished
5. Other consumption taxes need to stay for now, but transport taxes should be cut
6. Local authorities should raise half of their spending power from local taxes





According to econometric modelling by the Centre for Economic and Business Research (Cebr), a leading economics consultancy, implementing those proposals would increase GDP by 8.4 per cent over 15 years - equivalent to an additional £5,000 per family in 2012-13.

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