Alistair Darling promises stability

In an interview today with the Financial Times Alistair Darling responded to calls for change in the tax treatment of private equity firms.  He said that he would "always strive in making change to try and make the [tax] system simpler" but would not make populist changes to capital gains or individual taxation which risked serious unintended consequences.  The comparison to Sarbanes-Oxley that he draws is apt.  Overly onerous regulation can do serious harm to a nation's competitiveness and the UK should not return the favour the US did in forcing financial services firms to relocate to the City.

He also made some moves to make the appointments system for the Bank of England's Monetary Policy Committee more transparent.  Essentially, the system will be the same as before but it will, at least, be reviewed by the Treasury Select Committee which should make it more likely serious weaknesses are spotted before a candidate is approved.

What Darling hasn't yet addressed is whether he will recognise the case for tax cuts.  Sir Digby Jones, the new minister for trade and investment, added his voice to the growing numbers calling for reductions in corporate taxation:

"Sir Digby, the outspoken former CBI director-general who is to take a
seat in the House of Lords, stopped short of explicitly calling for a
cut in corporation tax, but indicated Britain's system needs to compete
with rival nations on the total amount of tax companies pay."

Personal taxation also needs attention.  While we should welcome Darling's refusal to bow to demands for private equity to be taxed into exile, continuing with the policies of the Brown era would be deeply unwise.  Both the economy and ordinary people whose wage increases are dissapearing in rising tax bills deserve better.

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