Doing the right thing regardless of the EU

Cameron and Osborne's latest announcement on the economic crisis is a good start, but they must still go further for it to be of meaningful benefit. The idea is to offer small businesses a VAT deferral, allowing them to pay their VAT six months later than expected. Some have assumed this is six months off paying VAT, but it isn't - small businesses will still pay the same, they'll just pay it in April rather than November.


Any respite is, of course welcome, but this doesn't even in the medium term mean firms will pay less tax. They still face the same burdens, and there is no real prospect of the economic crisis having just blown over in six months time. A VAT cut, and/or serious reductions in other taxes would are needed to keep businesses afloat, keep people in work and bolster the economy. The seven point "Backing British Business" manifesto launched today by The Sun contains several of the more radical steps that businesses need sooner rather than later. It's urgent that we offer swingeing reductions in company tax burdens - not just the same burden in a few months time.


Over at the Spectator Coffee House, Fraser Nelson raises another interesting angle of the VAT issue. As VAT changes can only be introduced with unanimous agreement of all member states at EU level, can Cameron really do this if he is elected? The answer is that of course he can - the EU may not like it, but a democratically elected Government of the UK has the final power to control our affairs.


Furthermore, if he was to go ahead and provide tax cuts regardless of what the EU thinks, does anyone really think that it would be strategically or electorally damaging? In an economic crisis, people want tax cuts to help the economy and they'd rather see their Government bring them in in defiance of the EU than knuckle down and let the EU refuse to let us do what's needed to help the economy.


A VAT holiday is a good start, but let's have corporation tax cuts, VAT reductions and a simplification of the arduous rules businesses have to obey. If the EU don't like any of that, I'd hope any Government would do what was best for Britain regardless of how many hurt feelings there might be in Brussels.

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