Adam Smith Institute comments on the Autumn Statement and Spending Review:
On the reforms to tax credit cuts, Executive Director Sam Bowman said:
This is the right decision on tax credits, and we applaud the Chancellor for changing his mind. Tax credits are the right way of doing welfare, encouraging people into work and topping up the incomes of the working poor. But now that they have been protected, we should reform the system by making it less complex and automatic, just as PAYE taxation is run.
On changes to business rates and corporation tax, Head of Research Ben Southwood said:
Finally—the government is taking localism and devolution seriously.
Northern Ireland has needed control of its corporation tax rate for years—otherwise business simply flees across the border to the Republic where rates are 12.5%—and this move has been long-awaited.
But the bigger change is giving local authorities and metropolitan areas control of business rates, and more importantly the revenue they generate.
The block grant gave councils little incentive to foster growth in their area. Rates revenues rise when land becomes more valuable, making it worth local authorities’ while to allow as much productive development as possible.
On top of this, local authorities—who own £250bn of fixed assets—will now get 100% of the proceeds if they sell of these assets and use them for reform projects, encouraging them to put all of these assets to their best possible uses.
Notes to Editors:
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The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.