Adam Smith Institute budget comment: 'spending like drunken sailor' won't work
The Adam Smith Institute has raised concerns about today’s big-spending budget. They have called for tax cuts and reform to create the foundations for sustainable growth.
The ASI's Head of Research Matthew Lesh said:
“It is seriously concerning that the Government is looking at ripping up the fiscal rules. A Conservative Government should not implement debunked Keynesian stimulus theories. Some infrastructure and public services spending, as well as supporting individuals and businesses during Covid-19, is necessary.
"But in the longer-run, spending like a drunken sailor will not create a thriving entrepreneurial economy. Expansive vanity projects won’t make us better off. Bureaucrats picking winners does not support risk-taking by entrepreneurs — the Government should be cutting red tape on innovation like limits on biotechnology, not presuming to know what is best.
“The tax burden is already at the highest it has been in forty years. We spend an extraordinary 5 months of the year working for the state before earning for ourselves. We should welcome the increase to the national insurance contribution threshold, the fuel and alcohol duty freezes, and maintaining the Entrepreneurs’ Relief albeit in a scaled-back form. But it is disappointing that the Chancellor has not used this opportunity to take more radical, longer-term steps to reduce the burden of the state and reform taxes. The targeting of environmental bogeymen, like increasing the gas levy and tax on plastic packaging, is not the right approach to environmental concerns — we need a broader approach.
“The structures and buildings allowance increase from 2% to 3% will help stimulate investment, but we need to go further. The Chancellor should remove barriers to investment by fully abolishing the Factory Tax, which holds back spending on buildings and machinery. The business rate review is a welcome opportunity to consider moving to a system that taxes on the basis of land value."