Faced with this degree of f***wittery from the supposed HM Official Opposition to the Most Corrupt Government Ever - to wit today's waffling about 'targeted' reductions in Employer's National Insurance - I almost lose my will to live, or at least, my will to fisk (I work in tax, I can imagine now how complicated and pointless the form filling will be, even putting the economics to one side).
Luckily, Patrick Vessey at the Libertarian Party 'blog and the Taxpayer's Alliance have stepped up to the oche:
PV's response:
What a stupid, stupid idea. Let's see what's wrong with it:
In a recession, most firms will be laying folks off, not hiring (so at least the proposal wouldn't cost anything!)
Employers who do want cheap, unskilled labour will be encouraged to fire existing workers and hire new ones, just to get the tax break.
It would put 'additional' money into the hands of business owners, who, in perilous economic times, and with a lack of bank credit, would be likely to hold onto it rather than it ending up in the wider economy.
It's a measure redolent of big government micro-management, so beloved of Labour, and increasingly so of the other major Kapitalist party in our country -- the Tories.
It does nothing for the average, employed person in our country. Nothing.
The TPA's response:
Too small scale: An estimated £2.6 billion tax cut is a mere 0.5% of the Government's 07/08 tax take. Given the scale of the crisis, and the fact that Corporation Tax, Business Rates and employers' National Insurance Contributions alone place a burden of over £100 billion on business*, much larger tax cuts are needed to help businesses and workers through the recession.
Too complex: Contrary to the stated Conservative Party principle of tax simplification, this proposal increases the complexity of the tax system with numerous conditions and qualifiers. These not only threaten to increase administration costs for business and Government, but also risk distorting companies' behaviour and even potentially skewing the balance of the economy when it comes to recover from the current crisis.
Poorly targeted: Because the proposals are targeted at recruitment, they do nothing to help firms which are having to shed jobs. Tax cuts should be aimed at helping companies to avoid having to lay people off in the first place. Any firm making redundancies within three months of recruitment will be barred from the scheme, so businesses most affected by the financial crisis will get no benefit at all.
* Heaven knows why they single out Business Rates (take £20 billion, the least bad tax that we have) and ignore VAT (take £80 billion, The Worst Tax Of All).
UPDATE (re Anon's comment): to be fair to the TPA, one of their sensible proposals at the end of their response is
"Cutting VAT by two percentage points [would 'cost' £10 billion]. Cuts by more than 2.5 percentage points would require a change in European Union law but a 2 per cent cut could be implemented immediately.
6 comments:
David Cameron is the least worst option. But only just.
Today was awful. Brown will take the credit for ending taxation and interest payments. He may well stand beaming at us all as the electorate fall for it again and vote in the monster for another 5 years.
the consolation is he will then have to deal with the disaster he has made. Except he won't. We will.
Dave.. get with the program!
You do not have to be a tax expert to realise this was bollocks, just a small employer like what I am. And what I need is a tax cut, period. This will enable me to pay back my overdraft (i.e. recapitalise my bankers) without pain. I will use the normal surplus from my cashflow to develop my business which will create jobs and wealth. Scrapping employers NICO is also a Very Good Idea. double bubble if we do not pay it and employees do - it will teach them to value it and the real price of their benefits.
...may I add something. I need to employ an admin person and I need to spend money on marketing and I need to develop our service proposition all of which takes time and cash and will create work and jobs. In fact there is loads of work out there for us if we can get at it. But we need cash, and having to reduce our o/d by £2k pcm at the behest of our bust and fuckwit bankers is killing our development plans. Cutting our taxes would instantly let us develop this and I can categorically state that we will be motoring and creating jobs.
The best thing the Conservatives could do is brief a couple of right-wing bloggers with said proposals and see what they made of them before announcing them!
If this is the best tax-cutting policy they can come up with, what ones were scrapped as being too stupid!?!
L, thanks as ever for hard evidence. The short term solution for fixing the banks is debt-for-equity swaps, which in turn takes the heat off business.
S, here's one that they cooked up a couple of weeks ago that ticks both your boxes.
It's possible they ignore VAT because it's run from Brussels and they can't affect it anyway.
But it's also possible that they don't know that and are being stupid.
Post a Comment