The City
Lost budget
Christopher Fildes Mr) one can have been more dis- appointed 14 by this year's Budget than its author. Upon Nigel Lawson has fallen the Bane of the Second Budget, or Chan- cellor's Curse. How often have we seen it! A newly-installed Chancellor brings in his maiden Budget, reforming much, but post- poning more. The taxation of pets (he says), with its unfair discrimination against dogs, is in need of thorough overhaul, and I hope to undertake this in my next Budget. But come the next Budget the Chancellor has troubles of his own. Sterl- ing, or wages, or the polls, or the backben- chers, are running away. he has enough to do, minding his shop, without making a million sharp-clawed enemies. So no more is heard of a comprehensive pet tax, and the cat lobby breathes again. It all hap- pened to Sir Geoffrey Howe, and to Denis Healey before him. Now it has happened to Mr Lawson. To him, though, it must be a deeper disappointment, because he has stood on its head the received idea about what a Budget is for. Paramount in the minds of post-war Chancellors has been the 'Budget judgment', otherwise and absurdly described as: How much can the Chancellor give away? Mr Lawson abjures the idea of using the Budget judgment as the means of managing the economy. To him it is the means of curbing inflation, and the more predictable it is, the less the markets will be disturbed, and the happier he will be. For improving the economy he relies upon reforming what in jargon is called 'the supply side', meaning that he tries to demolish the obstacles which stop money and labour and resources from flowing where they are wanted. He did as much, last year, for the taxation of com- panies, taking away a whole labyrinth of incentives and allowances and tax-saving devices (which, designed to increase in- vestment in industry, had the curious effect of making Corporation Tax voluntary for the banks) — and, with the proceeds, cutting the basic tax rate by one third. This year it was to be the turn of capital tax, and perhaps of personal tax. Ah, but this year's is the baneful second Budget.
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