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Back To The 1950s Or Forward To 2050 - Will Britain Grasp Its Brexit Dividend?

28/11/2016 15:18
ASSOCIATED PRESS

Are we stepping back in time?

From 1950's Grammar Schools, to 1970's Industrial Policy; does Theresa May really want us to live in a bygone era?

Actually, I don't think so.

Look a little closer and the Grammar Schools plans are really very modest. Just another option for the type of school that might exist in your area. Alongside perhaps a specialist Academy focussing on sport and the Free School set up by local parents, we will once again have the option of a local Grammar Schools. So the outright ban is lifted and I think that's a good thing.

So how about May's corporatist sounding Industrial Policy?

In truth, there have always been favourite areas of the economy favoured and pushed by government. From George Osbourne's backing of self-drive cars, to his financial support for the Graphene Institute - the last government even went as far as to establish the Catapult Programme which specifically singles out half-a-dozen 'pet' areas of the economy for special investment.

Call it a Catapult or Industrial Policy, I don't really care. What does matter in this post-Brexit world, however, is that we focus on creating a damn strong economy.

So, we should look to lower costs, slash red-tape for business and, wherever possible, dispense with taxes on growth. And Brexit should provide us with a huge opportunity, but are we ready to seize that Brexit Dividend?

Filed away deep in the EU's archive of ideas for a rainy day was the terrifying prospect of a "common consolidated corporate tax base". This would have been disastrous for Europe's competitiveness. Outvoted by socialist economies such as France, Spain and Portugal, the UK's rate could have eventually skyrocketed, forcing businesses beyond Europe's protectionist borders, therefore destroying EU jobs, profits and their taxes with them.

Brexit means we escape this damaging prospect or indeed the kind of European Commission meddling between Apple and the Irish government, which lead to a sovereign state unable to agree their own competitive pro-growth tax rate. Departure from Europe means that we need have no qualms about repeating the tax-cutting agenda used so successfully by the Coalition government to encourage business and provide record extremely low levels of unemployment, less than half that of France and the Eurozone.

Second, Brexit means an even bigger break when it comes to VAT.

The EU has a stranglehold over the sales taxes in this country. Although we were always allowed to put taxes up, to actually cut VAT has always required begging permission from the EU. This has led to the ludicrous situation where our own government has been unable to abolish the obviously unfair Tampon Tax (a tax, based entirely on gender, applicable to only half the population) because of outdated EU rules.

Next, we should seize this moment to wipe out Air Passenger Duty.

This is a tax which simply makes doing business abroad more expensive. APD pushes up the cost of trade deals, of networking and conferences, as well as of tourism, holiday-making and international shopping.

You can't achieve Theresa May's ambitious plan to become the world's greatest free trade nation, when you also happen to be the country with the world's highest Air Passenger Duty. Yes that's right. We charge more than anywhere else to go and sell ourselves abroad.

However, Air Passenger Duty is not even a European-wide tax. In fact, several EU countries have already started to dump their version of APD entirely. So rather than waiting until we out of the EU - the Chancellors current plan - Philip Hammond could and should launch an immediate review of this poorly designed (it doesn't even achieve its environmental goal), job destroying, inept tax.

Add to the above free-market economics, some big infrastructure investment on roads, rail, airports and power stations, then select a few favourite areas of the economy to back and you not only have an Industrial Policy, but an Economic Plan capable of beating our global competition too.

Far from looking back to the 1950's, Britain's economy should be actively preparing for the post-Brexit 2050's and beyond. Instead it will be all too easy to obsess about Article 50, whilst failing to seize the economic moment, thereby giving up our Brexit Dividend.

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