"Mr Speaker, Britain’s taxes and regulations are too burdensome. They are making it impossible to compete with the low-cost countries that have emerged onto the world trading network. They are driving enterprise abroad – like the 1,379 people who emigrated to Switzerland last year, the 80 hedge funds that have gone, and the 16,000 non-doms who have decided to make their money, create jobs and pay their taxes back home instead of here.
"Tax Freedom Day, calculated by the Adam Smith Institute, falls on 30 May, meaning that we force people to work five months of the year solely for the government. As the Institute’s blog noted on Monday, income tax and national insurance can take a whopping 62% out of people’s pay packets. On top of that, employers pay another 13.8%; I am abolishing this stealth tax and merging all these taxes together so that people can see what they really pay.
"In some cases, that means over three-quarters of people’s income. Thanks to the sudden departure of my colleague Vince Cable, I am now able to do the right thing and cut this burden by a third, so that nobody has to pay more than half of what they earn in income and social tax. And I am raising the threshold so that nobody on minimum wages, roughly £12,400pa, will pay tax at all.
"I would like to do more, Mr Speaker, but the public finances are in a parlous state after the profligacy of the last government. True, the Treasury will suffer an immediate loss of revenue; but I am convinced by the economic studies, which show that the huge boost to growth generated by low taxes means that those losses will be recouped in just over two years.
"High taxes are not taxes on the rich. They are taxes on becoming rich. And, Mr Speaker, I want more of our people to become rich. Capital Gains Tax is a clear disincentive against growing a large and successful business. We were wrong to raise it. The Adam Smith Institute said last year that we would lose business and revenues, and they were right. I am halving it.
"While the public finances do not allow me to go further, I am today publishing a table of the tax cuts I propose over the next decade, which I hope will convince people that we are genuinely committed to creating a low-tax economy. These will include large cuts in corporation taxes, and a massive reduction in the number and complexity of taxes in general.
"Mr Speaker, regulation is another burden on growth, costing around 12% of GDP. Two-thirds of this originates from the EU. I am setting up much stronger mechanisms to argue in Brussels against new regulation before it happens, rather than when it is too late.
"The burden is highest on the smallest businesses. If every small business in the country took on one extra person, we would have no unemployment and huge growth. To achieve precisely that, I am today exempting all small businesses from most employment regulation and replacing it with a general ‘fair and reasonable practice’ requirement on employers. If we have genuinely retained our sovereignty as my LibDem colleagues insist, Brussels will have no problem in us retaining the appropriate regulation for European-scale companies while exempting purely local businesses with no transnational impact.
"Mr Speaker, I have been asked to make increases in various programmes that exist to promote R&D and suchlike. Rather, I am abolishing all these complex, bureaucratic initiatives and using the money for tax cuts instead. And it is not for government to try to pick technological winners such as green energy. With a thriving capital market – and the Budget papers include my decision to roll back costly regulation there too – the market will decide where the country’s resources should be directed, not politicians.
"That, Mr Speaker, makes this a Budget for Growth, and I commend it to the House."