If we kill that off, we will have nothing left except for the tired giants of the FTSE 100. If we have to raise taxes to fund healthcare and public services, we should just be honest about it and raise income tax and VAT instead. At least that way we won’t damage the economy any more than we have to.
We already know that Hunt and the Prime Minister are committed to a hefty round of tax rises in the fiscal statement set for later this month as they attempt to balance the books and bring borrowing back under control.
Corporation tax is already set to rise to one of the highest rates in the developed world next year, so there is not much space there. We have already imposed windfall taxes on the energy sector, and surcharges on the banks, so there is not much room there either.
Instead, the Chancellor is looking at entrepreneurs, the self-employed and small businesses. The tax rate on dividends, used by many people who work for themselves as their main source of income, could well be increased. Capital gains taxes could be equalized with income tax, which would allow the Government to take almost half of whatever anyone makes from selling an asset they have created. And entrepreneurs’ relief, charged at just 10pc for anyone selling a company, may well be scrapped (and there is already a £1m lifetime limit, hardly a huge sum for a successful business these days).
To cap it all, Companies House is looking at increasing the charges for registering a new company, putting yet another burden on anyone embarking on what will without question be the riskiest financial decision of their lives. Add it all up, and the self-employed and start-ups will be made to bail out the rest of the country.
For the officials who run the Treasury, no doubt it all makes a kind of sense. Both groups are relatively lightly taxed compared to the rest of the country. Indeed, as Chancellor Sunak was already threatening to “review” – a code word for increase – the way they are taxed. With so few alternatives, it may be the only way to squeeze any significant revenues out of a stagnant economy.
Here’s the problem, however. It will kill off one of the few remaining sectors showing any signs of life.