Monday, December 05, 2005

Gordon Hood?

The UK Chancellor, Gordon Brown, has just delivered his Pre-Budget Report. Quite apart from the fact that he has had to substantially revise downwards his growth forecasts, he has now conceded that he will have to increase public borrowing. Naturally, he has blamed this on the increase in oil prices. What he doesn't explan is how Britain, an exporter of oil, has been affected worse than some other European countries which are importers of oil.

He also announced changes to the corporation tax rates. The zero per cent rate for the first £10,000 of profits for small companies is being abolished. It was only a matter of time before this happened. When he introduced this relief a few years ago, many existing businesses changed their business structure and became companies in order to take advantage of the relief. Subsequent anti-avoidance legislation only complicated matters, so he has now decided to scrap the relief. So much for certainty in taxation. Small companies will now face a bigger tax bill as a result.

Also, proof, if any were needed, that with this Government, private property has ceased to be sacrosanct. Gordon Brown has announced that unclaimed money in dormant bank accounts will be recovered and used by the Government to fund youth schemes. He may feel that the use of this money for a worthy cause justifies what is plainly theft by the Government of private property. It does not. The principle of the sanctity of private property forms part of the foundation of civilised society. On it, the laws against theft were founded. I am surprised that this announcement has not been condemned by the Opposition. In fact, George Osbourne, the Shadow Chancellor, in his response to the Chancellor's speech, stated that the measure was supported by the Conservatives! My, my, whatever next. Perhaps in doing so, George Osbourne thinks he is picking his battles, but I suggest that this is one particular battle he should have fought. For implicit in that policy is this Labour Government's belief that it is entitled to every penny of our money, and that we will only keep what it allows us to keep.

The supplementary charge on North Sea oil has been doubled from 10 per cent to 20 per cent. However, even the Government's assurance that there will be no further increases for the life of this Parliament has failed to assuage feelings. The Scots are furious. Alex Salmond, the leader of the Scottish National Party, has warned that this move threatens Scottish jobs. The Government has obviously chosen North Sea oil to bear the brunt of its desire for increased tax revenue. It dare not, at this time, impose a 10 per cent increase on any other tax.

The Chancellor also announced consultation on plans to slap taxes on profits made by landowners on areas gaining planning permission. Of course, he hasn't called it a tax. It goes by the rather deceptive name of 'planning gain supplement', and is being marketed as an opportunity to give local authorities a share in the profits made by the landowners. Quite why they should be given this 'share' in the first place is not clear. The Chancellor definitely knows how to pick his victims. He knows that not many people are likely to protest at what is in effect, double (or even triple) taxation of the landowners. In addition to the 'supplement, if the Government revaluation on properties in England goes ahead, such landowners may also face increased council tax. If they then come to sell the property, any increase in value will be subject to capital gains tax, notwithstanding that such an increase has already been taxed as a 'planning gain supplement'. Let us see how this will unfold.

The Chancellor made other announcements besides the above, but these are the ones that have caught my attention. I may return to this topic in future.
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