CITY AND SUBURBAN
The secret of a popular Budget collect more tax
CHRISTOPHER FILDES
With one bound Nigel is free. See him saunter towards his Budget, pockets jing- ling, while an approving world buys pounds and forces him, with pretended reluctance, to bring interest rates down. Can this be the same Chancellor we remember from the autumn, with every- thing against him — the pound skidding. interest rates pushing up, the Treasury looking beaten on public spending, the European Monetary System promoted as the nation's only refuge, and the National Institute forecasting a balance of payments deficit which would be more like a chasm? What has changed? The simplest change is the National Institute's. It has changed economists, and the new ones are more cheerful. The most dramatic change is the revenue's. Suddenly Mr Lawson is the Chancellor who knows how to get the money in. This is what has enabled him to afford the higher public spending with so much to spare that he can happily choose how much will go towards lower public borrowing (and thus towards lower infla- tion and cheaper money), and how much will go to cut tax rates. Tax revenues are a different story. It is not just that a growing economy generates more of them, nor that a credit-led boom in consumer spending does wonders for the VAT take, nor even that, with inflation drifting upwards again, real tax rates rise. Companies have dis- covered that Corporation Tax is no longer Optional. The reform of company tax in Mr Lawson's first Budget brought the rate down by one third, but ended the capital investment allowances which normally sheltered it Even tax losses, six years after the crunch of the early 1980s, are harder to find. The VAT receipts are blazing ahead — but £1 billion of that has come from a change in the tax penalties. Sometimes it used to pay to owe the Vatman. Now, get your return in late and you know how Lester Piggott feels. Privatisation sales are not revenue — dear me, no, they are negative public expenditure' — but £5 billion a year from them, planned for three consecutive years, makes a difference. Getting the money in, speeding up the Treasury's cash-flow, is considered a primi- tive form of economic management. It has, though, enabled Mr Lawson to come for- ward as the open-handed spender, the sound public financier, and the tax cutter. As that wise accountant, Sir Anthony Burney, says: 'Let us then resolve to make money, and leave it to the auditors to decide what is profit.'
Previous page
