Now is not the time to meddle with Tax

Could free market economics be a better solution? Certainly now is not the time to meddle with Tax. Balancing the books should not be the country’s priority whilst the economy is so fragile. Surely, we need to look forward to a more thriving economy before we consider tax rises. The tax burden on UK tax payers’ is estimated by the Tax Payers’ Alliance to be approaching 34.2% of Gross Domestic Product (GDP). In simple terms, GDP can be described as the value attributed to goods and services produced in a specific time period. Using this measure, tax has not been higher since 1970. Many believe in fact that tax cuts (rather than rises) are now critical if the economy is to restore any level of sustainable growth.

Looking forward

Allowing free market economics to flourish has allowed several notable Conservative prime ministers to achieve significant tax burden reductions. Between 1951 and 1955, Churchill knocked over 4% off this tax rate. At this time he said “for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”. Three successive conservative prime ministers, David Cameron, Theresa May and now Boris Johnson have all presided over the highest of post-war tax burdens. Each in turn allowing the rate during their residency at No 10, to sit above 33%.

Reductions

Grasping the four fundamental pillars of a free market economy; by starting to reduce government spending, reducing income tax and capital gains tax, reducing regulation and tightening the money supply to control inflation, are all within this government’s powers. It might just be, that by handing the reigns back to the backbone of the British economy, the Owner Managed Business, the economy will be kick-started far quicker than any form of tax increase on the one hand or austerity on the other, could ever hope to achieve. If the chancellor cannot resist a meddle when he stands up on the 3^rd of March to present his Budget, how about modernising and strengthening tax incentives and making them more accessible to Owner managed Businesses rather than increasing ‘easy win’ tax rates?

How can we help?

Above all, your Haines Watts Tax experts and business experts will be on hand to guide you through the aftermath of this first post-pandemic Budget and as we look to re-build our economy together, don’t forget to pick up the phone and involve us in your plans. We have a proven track-record of implementing and managing growth strategies for our clients whatever the tax regime may bring.