The Adam Smith Institute: The deficit reduction plans “still seem credible”
The Adam Smith Institute welcomed the roads, stamp duty and ISA announcements, but said that Osborne’s R & D proposal “risks crowding out private sector solutions” and argued that the Chancellor should make raising the National Insurance threshold “one of his top priorities”. It concuded that his plans to reduce the deficit “still seem credible”. On business rates, it said –
“A cap on business rate rises is welcome but the rates system itself needs more fundamental reform. The longer rates take to be revalued, the more distortionary the system is, penalising firms located in areas that have done badly since the last valuation. The longer the gap between rates revaluations, the greater the penalty for businesses in poorer areas and the effective subsidy for businesses in richer ones. Ideally the government should move towards a system of constantly rolling rates revaluations. If Zoopla can judge land values accurately on a rolling basis, so can HM Treasury.”
Centre for Policy Studies: “Jam tomorrow”
The think-tank cheered the stamp duty, R & D, tax credit, personal allowance and ISA reforms, but said that Air Passenger Duty, business rates and North sea oil reforms “small changes…just highlight the need to abolish Air Passanger Duty entirely and radically reform business rates and the taxation of North Sea oil companies”. But it’s main concern focuses on deficit reduction.
“There are still a lot of unanswered questions.The OBR now forecasts higher economic growth and higher borrowing this year and next but lower growth and lower borrowing in the following years. This breaks all the normal economic rules. Given the downward revisions to expected tax revenues, the credibility of the deficit reduction programme now depends entirely on new public spending cuts which have yet to be outlined. The Treasury now expects to raise a cumulative £8.5 billion from new schemes to reduce tax avoidance which are notorious for being unreliable revenue raisers.
Institute of Economic Affairs: “Filled with gimmicks”
The IEA gave the thumbs-up to the scrapping of the stamp duty cliff edges, but a thumbs-down to almost everything else – the top rates of the tax, the new multinationals taxes, the “retrospective and dangerous” taxes on bank profits, the Sovereign Wealth Fund and, indeed, the annual Autumn Statement itself, which it said should be scrapped. All in all, it said –
“This was an Autumn Statement filled with gimmicks. Many of the Chancellor’s policy announcements will do little more than fiddle around at the margins. The fact is the deficit is still so bad that the room for tax cuts is virtually zero. To create the conditions for long-term prosperity, politicians should review not only the scale of state spending but also the scope of government. The maintenance, yet again, of a ring-fence around areas such as schools, health and foreign aid is disappointing.”
Policy Exchange: A budget for Aspirational Britain
Policy Exchange concentrated its fire on the stamp duty changes, describing the statement as “A budget for aspirational Britain. The Chancellor pulled a significant rabbit out of his hat in the form of a major and immediate overhaul of stamp duty. Taxing property transactions can be a major barrier to home ownership, so it is important to do so fairly and efficiently.”
“Buying a home worth £1million someone can now expect to pay £3,750 more than under the old system. But the large proportion of the country – 98% – will be better off as a result of today’s changes. We can expect to see a greater number of transactions up and down the country. The changes will also remove price distortions around the old bands. Although welcome, the changes to stamp duty do not mask the fact that we are simply not building enough homes. The next stage of the homes revolution must be a focus on supply. This is the only way to bring down prices to spread the property owning democracy.”
Social Market Foundation: Osborne is paving the way for a smaller state
The SMF argued that the cut in employer National Insurance Contributions for those offering apprenticeships to people aged under 25 should come into effect now (rather than in 2016), and sees the new support for postgraduates as paving the way for the freezing of the repayment threshold for all student loans. Its take on Osborne’s announcement is that he is paving the way for a smaller state.
“This is an intensely political Autumn Statement with an economic argument behind it…While not mentioned in his speech, SMF analysis of the OBR’s report shows the Chancellor is planning spending cuts that would go far beyond what is needed to eliminate borrowing. Although borrowing will have turned into a surplus by 2018-19, the OBR’s figures show that the current Government plans to keep cutting beyond that, to create an overall annual surplus – after including investment as well as day-to-day spending – of over £23 billion by the end of the next Parliament.”
The campaign groups applauded the cut in Air Passanger Duty, but wants the whole tax scrapped; welcomed the roads announcement, but called for an end to HS2; said that NHS ring-fund should end, and warned that “the deficit remains extraordinarily high, yet there was precious little detail on where necessary savings will be found”. The main thrust of its statement was about Stamp Duty –
“[The announcement marks] a welcome victory for TaxPayers’ Alliance Stamp Out Stamp Duty campaign, as the burden of this pernicious tax on most homebuyers is reduced. Stamp Duty reform will be an early Christmas present for young people looking to get on the housing ladder and families who want to move home. The Chancellor is right to significantly reduce the burden that this tax on ambition has placed on hard-pressed taxpayers. Let’s hope this is a first step towards abolishing Stamp Duty altogether.”