Friday, 25 June 2010



TaxPayers' Alliance Bulletin - 25th June 2010

The Emergency Budget

So we’ve finally heard the Chancellor deliver his Emergency Budget on Tuesday. We had some welcome news on spending cuts: a two year public sector pay freeze, the abolition of the Child Trust Fund and cuts in welfare spending are all long-standing TPA recommendations that will be absolutely key to getting the public finances under control. It was also good to see the lower threshold for Income Tax lifted. There was relief for business too, with drops in corporation tax and the small business rate. This is a very positive development: existing tax and regulation stifled business but we need to have a vibrant and dynamic private sector to drive growth and create jobs and wealth – cutting these taxes will help.

However, such optimism was checked with news that VAT will be hiked to 20 percent. This is bad news for those on lower incomes, as VAT makes up a greater proportion of spending the less a person earns. The 2.5 percent increase in VAT means that instead of the higher income tax threshold being a welcome break for millions of families on low to middle incomes, it is just inadequate compensation for their increased VAT burden. Diagrams in the Budget document make it very clear that across the income distribution families are going to see a big hike in their tax bills. The coalition have no mandate at all for a VAT hike, as our video released this week shows. Voters might be left wondering why they should bother paying attention during elections if campaign rhetoric bears so little relation to reality on such a big issue. And while spending cuts were welcome, overall spending is actually increasing in cash terms. There was plenty of low-hanging fruit for the government to pick which means there is no need for tax rises. This week’s Emergency Budget gave with one hand and took with the other.

It was exactly these kinds of issues that were discussed at our Post Emergency Budget Briefing on Wednesday morning, held with the Institute of Economic Affairs. The turnout was impressive, and it was great to see many of you in attendance. TPA Research Fellow Mike Denham showed that real action still needs to be taken to tackle the national debt – it currently is like a second, more expensive mortgage for Britain’s families. Other speakers discussed the issues of tax and spending cuts, with John Redwood MP saying that £50 billion of cuts was easy, and that £100 billion was possible. Noted economist David B. Smith also took to the stage to say that the spike in VAT could well cost 235,000 jobs by 2020. The general feeling of the panel was that some good measures have been taken by the Chancellor – but there are some very unwelcome tax increases in the mix as well. The size of the deficit means that there’s plenty more work to be done, but the focus must be on reducing spending – people across the UK already pay too much tax. We await the Comprehensive Spending Review in the Autumn for more detail of spending reductions.


Ones to watch

Head over to our YouTube channel and subscribe to get all the latest video clips from the TPA. Up now are the Post Emergency Budget Briefing speeches from:

Philip Booth, Mike Denham, Allister Heath, Graeme Leach, William Norton, John Redwood MP, Matthew Sinclair and David B. Smith.

Also you can recommend (click 'Like' underneath the video) or share this video (pictured right) with your friends to spread awareness about the VAT hike. Let them know about the disgraceful VAT hike that will hit the poor hardest, and that the Government has no mandate to introduce.


New Research: Regional Development Agencies exposed

On Monday we released new research revealing details all of the grants given out by the Regional Development Agencies between 2007 and 2009. The findings were startling: over sixty percent of the money given out went to the public sector. You can read the full report and see where money was dished out in your region here.

For organisations that claim to be "business-led" and essential to the economic recovery, this is truly a shocking statistic that should be the final nail in their coffin. Not only that, but the regions of England are more imbalanced then when the RDAs opened for business in 1999. They have merely perpetuated a public sector dependence in many areas of the country, and our report strengthened further our long-standing campaign case to abolish them entirely. Encouragingly, that campaign now seems to have succeeded, with the Budget document featuring an announcement that the coalition government plans to scrap the RDAs. If they go through with it and do it properly, it will be a major success for the TPA which will save taxpayers billions of pounds - needless to say, we'll be watching very closely to make sure the RDAs are shut down entirely.

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Posted by Britannia Radio at 20:21