A BUDGET BUST

Even the densest politicians are forced to acknowledge that successful businesses are essential to get the world out of recession: there is no other potential source of the sort of economic growth that is required.

Or at least they acknowledge this obvious truth when talking to business audiences. It does not remain in their amoeba-like brains long enough to influence their policy decisions.

This blog tries hard not to be political, but we cannot ignore the fact that the current economic crisis is being prolonged and aggravated by the stupidity of politicians who seem incapable of learning from their past mistakes.

The Budget announced today by the Chancellor of the Exchequer – the minister of finance – of the United Kingdom seems designed deliberately to discourage the sort of enterprise and business growth that is necessary to cure the recession.

It does nothing to decrease the difficulty of doing business and it penalises those who overcome those difficulties.

The so-called “help for business” is a list of tiny, tokenistic “schemes” of the type that have long been discredited. The amounts of money being made available are miniscule compared with the burden being placed on business by the government, and the way it is being spent means it is likely to be wasted on the sort of uneconomic businesses that really ought to go under rather than invested in those with real potential for future growth.

This is the same strategy that proved disastrous for Britain in the 1970s.

Needless to say, there was nothing in the Budget to ease the regulatory burden on business or to encourage the banks to deal equitably with their business clients.

What was in the Budget was a counter-productive increase in higher rate tax, which both reduces the rewards of business success – and therefore discourages entrepreneurs from taking risks – and reduces the pool of money for serious investment in business, as opposed to government posturing.

What the British economy, along with many of its counterparts, so desperately needs are measures to reduce the fixed cost burdens on business. These range from taxes imposed before any business is done (such as business rates and payroll taxes) to the costs of administering pointless regulation.

Even the short-sighted, narrow-minded, self-styled “intellectuals” of the political and media Establishment must see that this is folly – but will any of them say so, or, do we remain a lone voice of reason?

Comments

April 23. 2009 03:43

Vafa

I will bet some serious money that the 50% rate actually drives people out of the UK and reduces the tax take

Vafa

April 23. 2009 23:18

Stuart Fairney

Two words ~ Laffer Curve  It's well known.  This is nasty politics, nothing else.

Stuart Fairney

April 24. 2009 02:45

Steve

I would remind everyone the Martha Stewart Law Of Revenue “Only the little people pay tax.”

Steve

April 24. 2009 02:58

Bruce

This government are quite wretched. Not one of the cabinet could hold down a Director’s position in a private or public company.

Bruce

April 25. 2009 02:38

Stuart Fairney

I am surprised to see that the right honourable Anthony Charles Lynton Blair (remember him?) opposes the 50p measure.  

In fact when you add NI it's about 64% net or two-thirds of your income!  

Stuart Fairney

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