Tax and Fiscal Policy

IEA reaction to Budget 2015


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Commenting on the Budget, Mark Littlewood, Director-General at the Institute of Economic Affairs, said:

Spending

“The British taxpayer is paying the price for George Osborne’s failure to balance the budget over this Parliament. The deficit may be falling, but it is doing so at a snail’s pace and the plan is still to increase the public debt by over £120bn in the coming years before the government starts living within its means. The consequence of the coalition failing to exercise spending restraint is that our tax burden remains far too high. No doubt, a few years ago, the Chancellor was hoping he could offer some dramatic tax reductions before polling day. There were some crumbs of comfort here, but nothing to truly merit enthusiastic cheers.”

Tax

“It is the failure to properly tackle the deficit that has left the Chancellor with so little room for manoeuvre on much-needed tax cuts. This Budget gave us simplification of tax collection but featured nothing to address the complexity of the UK tax system. The array of tinkering, fiddly tax changes announced today will do little to encourage a more coherent system. It’s a shame that politicians don’t seem to understand that simpler, lower taxes are the best measures to ensure our prosperity.

“The above inflation rise of the threshold for the 40p rate of income tax is long overdue, bringing welcome relief for millions of middle earners. Politicians should continue to raise this threshold to begin to compensate for years of under-indexing.”

Savings

“It’s great news the Chancellor is liberalising the sale of annuities and improving the flexibility of ISA products. Less positive is the economically illiterate introduction of a ‘Help to Buy ISA’ which will serve to increase demand in a housing market characterised by scarce supply. What we really need to help everyone struggling with the high price of housing is planning liberalisation to allow more building and reduce housing costs for ordinary people.”
Notes to editors:

To arrange an interview please contact Stephanie Lis, Head of Communications: 0207 799 8909 or 07766 221 268

The IEA’s Submission to the Budget, by Ryan Bourne and Philip Booth can be downloaded in full here. 

To register to attend the IEA and TPA Post-Budget Briefing, due to be held on Thursday 19 March at 9:15am, click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.



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