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Patrick's Property Politics

Does Rishi Sunak's statement promote Spring growth?

Wednesday 23rd March 2022

By Patrick Bullick

At the end of his Spring Statement Rishi made a great flourish about a cut in the basic rate of Income Tax of 1%.

It’s a nod in the right direction but pathetic really, especially as it is not now but at ‘some point’ before May 2024. i.e. the next Election.

The £50bn windfall in the public finances proves that what we need is strong economic growth. This windfall apparently came about because growth was greater than expected bringing in turn more tax inflows than expected.

The Treasury need to learn from this. They never seems to grasp that many taxes are inhibitors to growth. In particular, transaction taxes like VAT, CGT and SDLT on properties stifle activity. Corporation tax rates have a direct effect on inward investment- the lower they are the more companies invest. Note Dublin since the financial crash.

Rishi should be using the £50bn surplus right now to reduce these tax rates and increase economic activity- not save them for a pre-election political feel-good splurge.

Credit where credit is due, his aligning of the NI starting threshold with the basic rate threshold of £12,500 is a fair move which benefits those at the bottom of the earning scale most.

It does beg the question - Why keep up the pretence that there is any difference between NI and Income Tax?

There is none.

NI & Income Tax are collected by the same people, from the same people, lobbed into the same pot - and spent on the same things. They are exactly the same bar the name.

Brave is the Chancellor who admits that the basic rate of tax is actually 32%.

- oh sorry 31% by the next Election.

PB

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