In lights of Chancellors Healey’s budget, the Liberal party believes some of the announcements made were bold; however, haven’t gone far enough in terms of being radical.
The party welcomes some of the announcements made, most notably on the reform of Business Rates – by increasing threshold at which businesses start paying, from 12,000 to 18,000 as well as the devolution of Business rates down to local government at 100%, by the end of the decade. Furthermore, the party also welcomes the news that unpaid carers will not lose their entire Carers allowance, if they earn more than £204 a week after tax. Moreover, in terms of the crippling energy costs that are unfortunately blighting millions of businesses and households, the chancellor made some necessary measures to remedy the aforementioned: most notably cutting VAT on electricity bills beyond April to July as well freezing fuel duty again to July.
However, despite some of above measures being welcome, the party still believes that the Chancellor could have gone further and thus been more radical.
In the short-term, the party would like to have seen Capital Gains Tax increased in line with Income Tax/Dividends Tax (however, allow for Inflationary Gains, to prevent the detrimental impact on entrepreneurs). Moreover, the party would like to have seen the Personal Tax Threshold increased to at least 15K, both freeing up 5 million people from paying tax and thus act as an incentive for people to get back into work and thus coming off welfare. Lastly, the party would like to have seen Corporation Tax being reduced for 1.2 million small and medium sized business (over 80% of companies), by lifting the minimum threshold to £100,000. Subsequently, small businesses would pay 15% corporation tax rate, rather than the standard 25%.
Longer term, the party would like to have seen a root and branch reform of the economic system by firstly simplifying the tax system, most notably merging National Insurance with Income Tax. In addition, the party would like to see the reform of Business Rates, Council Tax and Stamp Duty Land Tax into a Land Value Tax. Finally, the party would like to see as well as Business Rates being devolved down to local government at 100%, by the end of this decade, also Council Tax (including fees and charges) at 100% too.
In summary, whilst Labour still has a massive mandate in parliament, the Chancellor could have utilised such an opportunity, by being much bolder and indeed radical in the Budget, instead he chose to be somewhat cautious and indeed, ironically, conservative. Despite the merits of tackling the cost-of-living crisis, the chancellor should have also used the budget to cut Welfare to ensure that work always pays and thus increase the tax base by increasing employment, especially amongst under 25’s. Perhaps, next time round he will realise that Budgets don’t come round all that often and as such should be a bit more liberal in his application!
Economics Spokesperson Kayed Al-Haddad