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The Alternative PBR

With all the focus on the Chancellor's VAT plans, it is worth noting that the CBI has put forward its own recommendations on how to stimulate the UK economy:

The CBI is calling for:

- An improvement in the flow of capital available to the corporate sector

- Measures to prevent trade credit insurance cover being withdrawn from some companies

- Urgent action to change auditor's reports to cut the number of companies being branded with "going concern uncertainty" status

- Modest tax measures to support corporate cash flow

- Measures to support small businesses, including a special low rate of employer NI contributions and abolition of the planned rise in the rate of corporation tax paid by small companies

- Fiscal stimulus focused on employment including a temporary reduction in employer NI contributions

- An acceleration of public capital spending programmes, including the Building Schools for the Future programme;

- Government support for corporate pension provision

- More funding of apprenticeships and training

- More support for UK exports, as companies struggle to access bank finance.


The CBI suggests that this package it is proposing to help businesses cope with the recession would cost the Government around £13 billion. More importantly, it would help companies keep people in jobs. There is little point in cutting VAT if people don't have the money to spend in the shops.

At the very least, I expect Darling to abolish the proposed corporation tax increase for small firms but it mustn't be forgotten that this was instigated by his own Government. Personally, I believe that little else will be done to support businesses in this PBR and, as a result, we will see deepening problems for businesses over the next 12 months.

p.s. taxing the rich doesn't work - cutting taxes for the the rest of us does.

Comments

Spot on, Dylan.

As for Brown's new 10p - 45p.

If voters rightly realise that this 45p rate will eventually "after the recession" apply to people earning a lot less than £100K, say £40K, which many people would like to earn (or may already be earning), then they will not be pleased.

Even academics will eventually end up paying the 45p rate!
Anonymous said…
Why does it seem that politicians dont listen to the people who know what would be best for the economy . It has to be private sector driven, I keep seeing reasonable, intelligent ideas on how to help the economy - nothing listened to again
Anonymous said…
Dylan, you dont want to tax the rich as the tories only favours the rich.

At least Labour care for the poor and the hard working families and im glad they have taxed the rich fat cats.

Good on Alaistair Darling. Tories care more for taking care of business people and the well off .
Anonymous said…
As the statement I just read 'taxing the rich doesnt work'. Well yes it does, the rich are fine, it's us poor people that really suffer along the lines.
My grandfather once said-tories are about saving the rich !

I agree with him.
Anonymous said…
Yes, you're right, it will be poor people who suffer - one third of kids in wales are in poverty and the gap between rich and poor groiwn, thanks to labour
Anonymous said…
and you think conservatives can do better? hahahahahhahahahahahahhaahhahahahaha
Anonymous said…
In what has turned out to be a very difficult time for the UK government a number of accountants have come forward to suggest that the new 45% income tax rate will raise negligible income for the authorities. There is a strong suspicion that more and more of the higher earners brought into the new tax rate will either make larger conditions to their pensions, give more money to charity or move overseas.
Anonymous said…
The Treasury is expecting to recoup £1.6 billion a year from increasing the top rate of income tax from 40 per cent to 45 per cent for workers earning more than £150,000 and a further £1.6 billion a year from scrapping the tax-free personal allowance for higher earners. However, the influential Institute for Fiscal Studies (IFS) said that the 45 per cent rate would raise “approximately nothing”. Higher earners could avoid paying the tax by contributing more into their pension plans, giving more to charity or leaving the country.

Those earning more than £150,000 will face an effective tax rate of nearly 60 per cent once national insurance and other taxes such as VAT and fuel duty are taken into consideration, the IFS said, which would prompt those with high incomes to seek ways to avoid paying the tax.

Accountants agreed that some of the wealthiest people could be tempted to leave Britain to avoid the new tax regime. The Treasury expects that by 2011 about 360,000 people will earn more than £150,000. “There is a real possibility that a proportion of the super-wealthy will decide to base themselves elsewhere. Those with an annual income of more than £1 million will certainly think about it,” Patrick Stevens, tax partner at the accountant Ernst & Young, said.

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