Wednesday 17 August 2011

Here we go again...

From the BBC:

The government has announced locations for new "enterprise zones" in England to try to boost economic growth. Ministers said 30,000 new jobs would be created by 2015 by giving cheaper business rates, superfast broadband and lower levels of planning control...

Prime Minister David Cameron said: "We are determined to do everything we can to make Britain the best place in the world to start and grow a business. Enterprise Zones are a major step towards delivering this - cutting business taxes, easing planning restrictions and giving business the tools they need to invest and expand.


Successive UK governments have mucked about with Enterprise Zones with lower Business Rates (which are tax on land ownership, and not a tax on business), and all that happens is that rents go up to soak up the Business Rates cut. Simple, observable facts. Ditto with SDLT-free zones.

There's another variant on these, whereby the buildings qualify for capital allowances - all that happens is that the builders bump up their prices accordingly so that the net cost of the building ends up at a fair price.

"How can builders do this?" you may ask "Wouldn't other builders bid the price down to market value?"

Well no, because the owner of the land, who has the whip hand, appoints the builder and they split the difference somehow. And if you bought the land with the intention of trading there, no doubt your accountant will tell you that the most profitable use of that land is to build and sell an overpriced building.
-----------------------------
I suppose the good news is that the Tories have come up with something that will prevent riots and looting in future:

"David Cameron is being urged to accelerate tax breaks for married couples as part of his moral clean-up of Britain following last week’s riots."

You can just see it, can't you? If ever the riots and looting kicks off again, the police won't need truncheons and shields, they'll need megaphones. They can march line abreast up to the rioters and solemnly announce that if their mothers can find somebody to marry them, while they might admittedly lose up to £200 a week in extra benefits, their new husband will get £10 a week knocked off his PAYE. That'll have the little scrotes scurrying right back to their council estates to pass on the glad tidings, eh?

7 comments:

Anonymous said...

I guess you could look at it the other way around.

There may be rioters outside your door smashing up your neighbourhood, but at least you've got your £10 a week tax break. The government is on your side!

Sean said...

Last time I looked 10 quid a week was 520 quid a year, I suppose if you are anti then its 10 quid and pro then its 520 quid.

I married my 17 year old bride 24 years ago and it just got better and better. I think its great and giving us an extra 520 quid a year will buy us a nice weekend away and a couple of good meals and wine........SO FO Losers, we deserve it, backbone of the nation we are! :0)

Mark Wadsworth said...

AC, yup.

Sean, ah, but will you really be better off by £520 a year? That tax break has to be paid for somehow, and seeing as most people are married, it is married people who will pay the bulk of the extra tax. So you'll get a cheque for £520 once a year, but your PAYE will go up by £300 or £400.

As ever, the losers will be single people in work, who will just pay the extra PAYE. Unemployed couldn't care less either way.

Anonymous said...

Lower levels of planning control would help.

View from the Solent said...

Seems that Adam Smith Inst. is trying to outdo The Mash.

Dr Evil said...

So why not reduce corporation tax and give grants to business to set up and maintain them in specific areas? Or has this been tried before?

Mark Wadsworth said...

Anon, yes of course.

VFTS, why not have 'bureaucracy zones'? Some people love that sort of thing. As long as they fund it out of their own taxes...

Ch, if we are going to cut taxes, why not start with the worst ones, VAT and Employer's NIC? Small new companies don't really have worry about corp tax, that's not payable for ages, but VAT and NIC smash them over the head from the word 'Go'.

Grants make things worse, as you have to increase taxes on 'somebody else' to fund them.