IEA economist responds to Shadow Chancellor’s speech
Julian Jessop quoted in the Daily Express
Christopher Snowdon writes for The Critic
Commenting on Rachel Reeves MP’s speech at Labour Party Conference, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:
“The Shadow Chancellor has shown a willingness to think big, but her speech raised more questions than it answered.
“Business rates are a mess and fundamental reform of corporate taxations generally is long overdue. Even after today’s speech it is clear none of the main parties has a credible alternative.
“Labour has proposed a huge increase in the digital services tax, from 2 per cent to a punitive 12 per cent. But the digital services tax is a tax on sales rather than profits – and any increase will inevitably be passed on to consumers.
“Thereafter, Labour intends to rely on proceeds from a new global corporation tax regime for multinational companies, which is still only at the discussion stage. It is unlikely that the UK’s share of any additional revenues would be anywhere near the £30bn or more usually raised every year from business rates.
“As for a new tax on commercial property, this could just be business rates by another name.
“More positively, Labour is proposing greater scrutiny of Covid procurement contracts and plans to scrap ‘hundreds’ of tax breaks. Our tax system certainly needs to be simplified – but keeping the overall tax burden down is even more important.
“The promise to spend an additional £28bn a year on ‘greening’ the economy only makes sense if this investment delivers real benefits to justify the extra borrowing. This is unlikely. Previous governments – of all political colours – have a poor track record trying to pick winners.
“As for a new Office of Value for Money, public spending is already independently scrutinised by many organisations, including the National Audit Office, the Office for Budget Responsibility, and several parliamentary committees. Labour’s new quango might just be a rebranding of what is already happening.”
Notes to editors
Contact: Emily Carver, Head of Media, 07715 942 731
IEA spokespeople are available for interview and further comment.