Ed Miliband's economic incompetence makes him a natural blood brother of French president Francois Hollande. Then again, his true mentor could be his former boss, Gordon Brown. What a marvellous choice of allies...
It is no easy task finding a way through the thicket of Ed Miliband’s economic and fiscal ‘policies’, so let’s get hacking. First up, there is his intention to restore the 50 percent income tax rate.
This was not introduced by Alistair Darling as a fiscal measure. It was purely political, an Improvised Explosive Device left by the departing Labour Chancellor to discomfort his successor, Conservative Chancellor George Osborne. Now Ed thinks it’s a vote winner in the belief that the politics of envy nearly always is. He is right, of course -- up to a point.
The tax raised £100,000,000, about enough to buy a couple of penthouse apartments in a fancy part of London, or two top level Premier League soccer players. But it will do much more than £100 millions’ worth of damage to Britain’s image and attractiveness as a place to do business and to encourage the brightest and best to come and work in the UK.
Foreigners who might have brought investment and enterprise to Britain may well go elsewhere.
Top rates of tax elsewhere are 41 percent in Ireland, 45 percent in Germany and even in France it is 45 percent, disregarding the 75 percent wealth tax for earnings above €1 million. And the UK’s competitive advantage in its largest sector, financial services, will be under threat from low-tax regimes, such as Singapore (20 percent), Hong Kong (17 percent), and Dubai (zero).
Already 30 percent of all income tax is paid by 1 percent of taxpayers. How’s that for equality, Ed? In any event, it is not difficult to avoid getting into the top tax band by some perfectly legal legerdemain.
Next is his assault on the banks.
This has already caused a sharp drop in share prices, which has in turn reduced the expected return on selling taxpayer-funded banks. He intends to break up the larger banks, as if he had the remotest idea about the optimum size for a bank. If this happens, early casualties will be small businesses because the need to downsize will result in smaller and higher-risk accounts being jettisoned.
He promises to freeze energy prices. The immediate effect would be to reduce investment in energy companies, and that means lower capital investment in desperately-needed new power generation.
Perhaps remembering the Marxist principles he absorbed in the parental home, he proposes to confiscate house builders’ land banks. He clearly understands little about the house-building industry.
Land banks are absolutely essential for forward planning, security for funding, and to predict the bureaucratic delays by the planning authorities which are the greatest source of under-achievement in the industry. He also proposes to launch state-funded competition to tackle the wrong issues in the wrong way.
His role-model is surely President Hollande, whose addle-pated policies for getting France out of the economic merde are higher taxes, a larger state and anti-business.
Or perhaps it is his former mentor -- the previous Prime Minister, Gordon Brown?
Robin Mitchinson is a Contributing Editor to The Commentator. A former barrister, living in the Isle of Man, he is an international public management specialist with almost two decades of experience in institutional development, decentralisation and democratisation processes. He has advised governments and major international institutions across the world
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