The Daily Telegraph is more supportive of the Conservative Party than any British newspaper, which is why its leader today – urging George Osborne to change course – is important. “The coalition’s economic policy is not working” it says, and goes on to urge a rupture with the failing policy. Its central recommendation is that corporation tax drops below Irish levels so Britain offers the lowest company tax in the European Union. Osborne could announce this on his 20 March budget. And he could spend 21 March listening to the sucking sound as companies started relocating to Britain.
“Overnight, this would make the UK the most attractive location in the EU in which to invest and do business, and it would be consistent with the steps the Coalition has already taken to make the country one of the best places in the world to start a new business. Such a significant reduction could be accompanied by the removal of exemptions, subsidies and special deals that businesses currently enjoy. Extra growth would compensate the Treasury for the up-front tax hit.
It also proposes the abolition – yes, abolition – of capital gains tax.
The Chancellor should also consider abolishing capital gains tax (CGT), currently levied at 28 per cent, which raises less than £5 billion a year but which requires a host of rules and regulations to prevent avoidance. This would infuriate the Left, but CGT reduces the incentive to invest at a time when it is badly needed. Entrepreneurship and risk-taking should be encouraged, not throttled.
This can be financed by the slimming down of government. The Telegraph leader cites a figure that you’d never read in the Guardian (or the Times) because it belies the idea of vicious (or courageous) cuts.