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Budget Briefing 2011 presentation final
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Post Budget Briefing 2011Post Budget Briefing 2011
Philip BoothEditorial Director
The Institute for Economic Affairs
Why liberalisation?• Government’s plans assume 2.6% real output growth• If real output grows at (say) 1.5%, debt reduction will
be derailed• Government has not allowed for supply-side shocks in
its growth projection (e.g. higher taxes, regulation, oil prices etc)
• Output growth has been below trend growth rate• “Boom” and subsequent “bust” requires reallocation of
economic resources• We need to ensure people made unemployed by
government can be re-employed by the private sector – rapidly
Importance of liberalisation?• Trend growth rate may have fallen by nearly 1% due to
increases in government spending, taxation and regulation
• Youth unemployment at record levels• The prize is great – lower unemployment, faster deficit
reduction, higher tax take at lower rates, higher real earnings growth
The rhetoric
• 100 pages being cut out of the tax code in a process of tax simplification
• Employment regulations costing £350 million being dropped• Moratorium on new business regulation for businesses with fewer
than 10 employees for three years• Liberalisation of planning; house deposit scheme• Raising of tax thresholds• Reduction in corporation tax
The reality
• The tax code will be cut by about 1% – and new pages will be added. • The tax measures are trivial (e.g. angostura bitters relief and a host of
out-of-date reliefs)• Regulations imposed since 1998 alone cost business £90billion –
£350million is 0.4% of this• No rolling back of regulation for small businesses – just exemption
from new regulation• Planning only liberalised for areas in which building is already
allowed• Future tax thresholds to be under-indexed but indirect taxes still to
go up with RPI
Sajid Javid MPMember of Parliament for Bromsgrove
Mike DenhamResearch Fellow
The TaxPayers’ Alliance
Cumulative increase in borrowing
and spending,
2011-12 to 2015-16,£ billion
10 year gilts vs CPI inflation, 2000 to 2011, ONS and Bank of England
Debt interest plus public sector pensions plus state pensions plus PFI, £ billion
Matthew SinclairDirector
The TaxPayers’ Alliance
Band D Council Tax adjusted by GDP deflator
Fiscal crunch: the burden facing households over the next decade
Treasury energy price expectations