My first reaction to yesterday’s budget was that Gordon Brown plans to rob the very poor to give to those who are a bit better off. Getting rid of the 10% tax rate will hit the low paid hardest.
Having said that, I don’t claim to be much of an economist. I just squeaked through my economics A-level. Which is why it’s good to see that people who seem to know what they are talking about agree with me. Chris Dillow and Jeff Randall draw similar conclusions.
Gordon has extended this principle to corporate taxation, cutting tax for big companies while raising it for smaller ones. What is the rationale behind this? Just four months ago, the Chancellor said:
Enterprise is key to our future economic success and social cohesion. Our vision is an enterprising and innovative Britain where there is no ceiling on talent, no limit to potential, no cap on aspiration. I believe that across the country, thanks to the encouragement and support offered by campaigns like Enterprise Week and competitions like Enterprising Young Brits, we are seeing the beginning of an enterprise renaissance.
So how, exactly, is increasing the taxation of start-up companies going to help this “enterprise renaissance”?
Last night, a mischievous BBC reporter suggested that this is the sort of giveaway budget we usually get before an election. Could Gordon be planning to go to the country early to confirm his position as Prime Minister? If so, the shift in corporation tax would make sense. It’s the large companies not the small ones that give donations to the Labour Party. Perhaps Gordon is just buttering up his financial backers in time for the big push.