‘Raising Tax is great incentivisation to entrepreneurs in a recession’ says Darling!

Much was made when Alastair Darling and Labour did a complete u-turn on it’s manifesto commitment not to raise the upper rate of tax, but this they did and introduced the 50p rate for those earning £150,000 pa.  This was a real sop to Socialist Labour and hitting the rich….or ’squeezing the pips until they squeaked’!  Darling & Brown claimed that the extra revenue yielded would help to repay debt and thus help the recession effort…..but will they be proved right?

They are right that we need to repay debt, as we have argued many times before.  But spending levels continue to rise, like a cancer spreading through the veins of a defenceless old ravaged body.  The level of unemployment is soaring towards 3 million and attaining heights higher than what a junkie reaches on a heroin fuelled binge!  Unemployment is on the same trajectory as the space shuttle taking off from Cape Canaveral, the number of jobs available dives faster than a trident armed submarine….whilst benefit claimants drain the state further of key resources, (many through no fault of their own, victims of criminal economic mismanagement).

Sites like TrueBlueBlood have been highly outspoken about cutting tax on the entrepreneurial in society, not raising tax, (as Government Red Book figures show tax receipts rise on cutting tax).   Who is most likely to be the engine driving us out of recession?  The entrepreneurial in society or an unemployment benefits claimant?  This is by no means demeaning to the unemployed.  But a reality that those who have the money to take risks, take on more credit, invest in their businesses, will be the ones that create new jobs and help start bringing confidence back into the economy.  With confidence comes spending, hence off we go into a strong and healthy recovery. 

As predicted, those on high salaries are now actively looking at how to avoid paying this tax….such to the point that the Government may earn LESS revenue due to the higher paid seeking ways to minimise and avoid tax.

Today it was reported that leading firms are working with London’s finest accountancy firms on tax avoidance.  How? 

Strategies to avoid the tax include bringing forward payment dates for bonuses or dividends to pre-empt the introduction of the tax in April next year or deferring payments until after the general election.

Ingeniously some companies are planning to bypass the top rate tax by paying 3 years’ worth of salaries and bonuses to top employees this year.  Employees would then loan the salaries and bonuses  back for a pre-arranged rate of interest over 3 years.

The brain drain of talent abroad has even commenced….Guy Hands, the entrepreneur and city financier who runs Terra Firma Capital Partners, has already quit Britain.

The Iron Chancellor benefited from the previous Conservative Government’s economic management and boom conditions.  Over the past 12 years New Labour have frittered away a golden inheritance….and Brown & Darling have been found out and seen to be the economic criminals they surely will be seen in history as.