Wonks Praise Tax Cuts, Warn There’s Still More to Be Done

Wonk world has reacted to Hunt’s Autumn Statement, the general consensus from the free market think tanks being that there’s  a few positive announcements, though not enough to be excited about. Guido gives you the run down…

The Institute of Economic Affairs’ Mark Littlewood welcomes the NI cut and permanent full expensing, though cautions that there is far more work to be done to reduce the tax burden and decrease spending. He called the statement “a step in the right direction, not a leap”…

The Taxpayers’ Alliance called the statement a “mixed bag” of good and bad news. Chief executive John O’Connell said, “Cuts to taxes for businesses and workers will be warmly welcomed, but the fiscal drag of frozen thresholds means the UK is still on track for an even bigger tax burden by the end of this decade.” Not a huge cheer from the TPA…

The Growth Commission points out that “while the cut in National Insurance Contributions by 2 percentage points will add 0.6% to GDP per capita after 20 years, it needs to be borne in mind that the freezing of tax allowances had already cost 1.3% of GDP”. Co-chairman Douglas McWilliams says the measures “are falling short of getting us out of economic stagnation”.

The Centre for Policy Studies welcome the permanent full expensing, something they’ve been campaigning for for many years. However, they warn against the decision to maintain the triple lock which “prioritises older people at the expense of younger workers”. Robert Colvile, CPS Director, cautioned: “The economy, and our long-term growth prospects, are still far from where they need to be.” Still much work to be done…

The Adam Smith Institute‘s Maxwell Marlow says “there is much to be positive about this statement“, praising the announcement of “a number of pro-business measures”. Though he cautions that Hunt will still need to “plan for public spending restraint”. The invisible hand will do its work… 

The campaigners over at Stop the Taxi Tax say that Hunt’s pledge to consult on the 20% non-Black cab taxi VAT is “good news, but there’s no time to waste to stop this damaging tax“.

Director of Onward, Sebastian Payne welcomed the measures, saying, “Today’s Autumn Statement showed the best of moderate conservatism – combining bold measures to boost growth and slash taxes, with support for struggling workers and families.” Optimistic tone from the wets…

Douglas McWilliams, Co-Chairman of the Growth Commission says

“… there was little acknowledgement of just how high the public spending bill now is – and the impact such a large state has on the prospects for economic growth. My overall sense of this statement is that the Chancellor has taken a loaf of bread from the taxpayer and given us back a couple of slices.”

Not a full return to tax-cutting Tories…

mdi-timer 22 November 2023 @ 15:04 22 Nov 2023 @ 15:04 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Hunt’s “Autumn Statement For Growth”

Hunt’s celebrating cutting borrowing and inflation (questionably), so that now, “like this Prime Minister, we are taking decisions for the long term” to end “big government, high spending, and high tax“. The OBR’s forecast, just published, has revised its growth projections down. Dampening Hunt’s claims that everything is rosy…

Here’s a full list of what was announced:

  • Benefits increased by September figure of 6.7%.
  • Increasing local housing allowance. Extra £800 for some households.
  • Hand-rolling tobacco duty up an additional 10%.
  • All alcohol duty frozen until 1st August 2024.
  • Pensions increased by 8.5% to £221.20/week.
  • Meeting NATO commitment of 2% GDP.
  • Public sector productivity has to increase by 0.5% a year.
  • HMRC expansion to raise extra £5 billion.
  • £7 million for educational organisations to tackle antisemitism.
  • £3 million for an anti-racist security trust.
  • £50 million funding into apprenticeships in key growth sectors.
  • Local authorities can recover full costs for business planning applications if timelines are fast. Otherwise money paid back.
  • £110 million for nutrient mitigation schemes.
  • £32 million for “busting” planning backlog and building in Cambridge, London, and Leeds.
  • £450 million for local authority housing fund.
  • Government will consult in early 2024 on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC.
  • Consult on allowing any house can be converted into 2 flats provided the exterior remains unaffected.
  • Lord Harrington report’s “headline” recommendations on civil service bloating will be followed.
  • NatWest retail and share office to get SID investing again.
  • Consult on giving savers the legal right to have employers pay into their existing pension pot if they want.
  • £500 million over 2 years to fund AI innovation centres.
  • Call for evidence to expand film and high-end TV tax credit.
  • New R&D tax relief combining existing schemes and lowering rate for loss-making SMEs from 25% to 19%.
  • £5 million to Imperial College to start a Fleming Centre.
  • £4.5 billion support over 5 years to attract investment into strategic manufacturing centres, including aerospace, life sciences etc.
  • Freeport & investment zones tax reliefs extended from 5 to 10 years. Opportunity fund announced to encourage more investment.
  • 3 new manufacturing investment zones announced in the Midlands.
  • 2nd investment zone in Wales.
  • Funding for regeneration projects and small projects in Scotland, Northern Ireland, and Wales.
  • Any company bidding for large government contracts required to show evidence for invoice payment within 45 days, then 30 days.
  • Business rate relief standard multiplier will rise in line with inflation, though small business multiplier freeze will continue for another year.
  • 75% business rate discount for retail, hospitality, and leisure extended for another year.
  • Self-employment taxation reform – Class 2 National Insurance abolished. Entitlement and credit access provided in full.
  • Class 4 National Insurance cut from 9% to 8% from April.
  • Full expensing for business investment made permanent.
  • £1.3 billion spent on helping 700,000 people with health conditions find jobs.
  • £1.3 billion extra help for unemployed.
  • If after 18 months jobseekers haven’t got job – programme for mandatory job placement. After 6 months the benefits will be stopped if no job.
  • National living wage and national minimum wage hiked.
  • Main 12% rate of employee National Insurance for income between £12,570 and £50,270 cut by 2% to 10%. Coming in from 6th January via legislation.

No sign of an income tax or inheritance tax cuts. Hunt reckons business investment will rise by £20 billion from these measures. The OBR points out the changes “reduce the tax burden by 0.7% of GDP, but it still rises in every year to a post war high of 37.7% of GDP by 2028-29.”  Apart from full expensing, these are tweaks – Doesn’t quite pass muster as an “Autumn Statement for growth”…

mdi-timer 22 November 2023 @ 13:29 22 Nov 2023 @ 13:29 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
WATCH: Hunt Announces Cut to National Insurance

Hunt has announced he will cut National Insurance for employees from 12% to 10% from 6th January. He will also abolish Class 2 NI and cut Class 4 to boost self-employed income. It’s not a full return to tax-cutting Tories however, as a cut in income tax seems to be delayed till the Spring Budget. More to follow… 

mdi-timer 22 November 2023 @ 13:20 22 Nov 2023 @ 13:20 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Autumn Statement: The Key Measures

The nextphase” of Sunak’s government is finally kicking into gear today with the Autumn Statement. Some measures are being briefed in what is being sold, as always, as a budget for working people. Treasury officials have kept tight-lipped about additional business measures, which are the most important…

  • 1% cut in headline rate of national insurance for employees and the self-employed.
  • Full expensing made permanent. An obvious measure…
  • Benefits and the state pension will rise by 6.7% and 8.5% respectively. Higher than trailed…
  • National living wage and minimum wage hiked. Crowd pleasers without much benefit…
  • Freeze on alcohol duties.

Cuts to inheritance tax and income tax have reportedly been delayed until the Spring Budget. No action on thresholds means that Hunt’s still raking in increasingly large amounts from stealth tax rises, costing workers around £80 billion by 2028. Stay tuned for the full list of measures…

mdi-timer 22 November 2023 @ 08:50 22 Nov 2023 @ 08:50 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Productivity Drops Ahead of Hunt’s “Workers’ Budget”

While Laura Trott claims a “completely changed” economic outlook will allow Hunt to cut personal taxes tomorrow, new data from the ONS shows Q3 productivity has actually slid backwards. UK output per hour worked from July to September was between 0.1% and 0.3% lower than the same period in 2022. Hunt’s high-tax “stability” measures strike again…

Business taxation reforms are the key to unlocking growth and productivity which Tory chancellors always promise and fail to deliver. Guido hears an extension of full expensing as an obvious good idea has a high chance of making it in to the Autumn Statement. Extensive business tax cuts are required – it’ll take more than tweaking to kick the economy back into gear…

mdi-timer 21 November 2023 @ 13:15 21 Nov 2023 @ 13:15 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Tories Talking Down Tax Cuts in Autumn Statement

For all the anticipation about tax cuts and briefings on a possible inheritance tax scrappage, it looks like none of that’s coming anytime soon. Guido hears the Autumn Statement will be free of major retail measures on tax thanks to, as Hunt keeps reminding everyone, a distinct lack of “fiscal headroom“. Too bad that headroom keeps increasing

Calls for tax cuts from businesses have been fended off by endless think tank warnings about their imaginary dire consequences. It looks like Hunt’s team have been spooked enough to listen. It is also rumoured that any major fiscal measures altogether are getting pushed back to the Spring Budget when Hunt’s hoping to unveil his “retail offer” for the election. Backbenchers are already restless, this won’t help…

mdi-timer 10 November 2023 @ 12:02 10 Nov 2023 @ 12:02 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
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