2018 Autumn Budget briefing
“The first rule of Chancellors, like doctors, should be to ‘do no harm’. Mr Hammond may be under growing pressure to announce a splurge of public spending, but this would undermine economic recovery.
“Even on current plans, it will be at least a quarter of a century since the government last balanced the books. Rather than tax and spend even more, the Chancellor should look for free market solutions to the country’s problems, including the housing shortage, the NHS in a perpetual state of crisis, and over-dependence on state benefits.”
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Budget Briefing 2018
An IEA briefing on the upcoming Budget calls for the Chancellor to resist a ramp up in public spending and recommit instead to reducing the burden of tax and regulation.
Written by the IEA’s Chief Economist Julian Jessop, the briefing includes his ‘Wishlist’ of policy announcements for Monday.
- The Chancellor should reaffirm his commitment to ease the burden of income tax (by raising personal allowances further) and to planned reductions in corporation tax (from 19% to 17% in 2020)
- The roll-out of Universal Credit should continue. This reform has the potential to help many more people, by making work pay and reducing their dependency on state benefits. But it may require additional spending to help the most vulnerable during the transition.
- Resist pressure for more support (i.e. taxpayer giveaways) for first-time home buyers.
- Resist desire to intervene to protect High Street shops facing increased competition from out-of-town centres and online retailing.
- Announcement for fundamental reviews of planning regulations and property taxes, including business rates, council tax and stamp duty.
- Abolition of the apprenticeship levy, which acts as a crude payroll tax, resulting in reduced wages or reduced employment, especially for low-skilled workers.
- Address the need for consensus for better targeting of spending on the elderly. This could include means-testing benefits such as free bus passes and the winter fuel allowance, and replacing the triple-lock on state pensions with a single link to CPI inflation.
Download the briefing here.
Further IEA Reading:
Download IEA report Taxation, Spending, and Economic Growth here.
Download IEA blog Which Tax Would you Axe? Part 1 here.
Download IEA blog Which Tax Would you Axe? Part 2 here.
The winning entry for the Richard Koch Breakthrough Prize – an essay competition to solve the UK’s housing crisis – can be found here.
About the IEA
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 and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.