BUSINESS people have a tendency to run scared of political debate. They rarely want to criticise politicians on the record (though they are often extremely outspoken in private). They very rarely agree to give interviews to discuss controversial subjects. This is a great tragedy: capitalists are failing to speak up for capitalism, allowing those who hate businesses, the profit motive, entrepreneurs and the City to dominate the debate.
So it is good to see that 507 entrepreneurs have put their names to a campaign to abolish the 50p tax rate. The website is www.scrapthetax.co.uk and is recruiting more signatories. This is an issue virtually every business executive and job-creating entrepreneur I talk to – including those who don’t earn enough to pay the tax – say is a major problem for the economy. It discourages investment, reduces incentives, chases away talent and sends a message to the world that the UK no longer values achievement and success. The rich suffer – but not as much as the poor and the middle classes, for whom job opportunities are reduced. The tax raises hardly anything and will actually reduce revenues over time.
The signatories, mainly from small and medium sized enterprises, are drawn from a wide spectrum, including manufacturing, exporters, pharmaceuticals, cleaning services, hair salons, care homes, digital media, skip hiring services, construction, security installation, plumbing and engineering. Andrew Denny, boss of Fix-a-Form International, put it well on the group’s website: “I am simply trying to create wealth for me, my kids and my loyal staff. Why are high earners treated like they have committed a crime and should be punished?” The government must listen to entrepreneurs. It is they who are creating the jobs and the growth that the UK economy desperately needs. You can’t tax a country back to prosperity.
ONE of my most fascinating encounters recently was with a major insurance executive. He told me the long-established principal of “caveat emptor” – let the buyer beware – has now been completely eradicated from his industry. Individuals are no longer held responsible and accountable for their decisions; the onus is entirely on regulators and companies.
It has long been obvious that caveat emptor is being undermined across the economy – it still exists in the housing market, where buyers are responsible for hiring surveyors and making sure they are happy with their purchase, but it has been in decline elsewhere. Yet this is the first time I’ve been told it is already finished in a key industry. This is depressing. Insurance is now on its way to becoming a utility-style industry, with regulators likely to concern themselves even with the profitability of individual products.
Such micro-management isn’t the right solution. Utilities aren’t known for their commitment to customers and innovation; regulators inevitably fail to protect consumers. We need a dynamic marketplace where consumers are empowered. The financial industry must make products drastically simpler and more transparent – and the government needs to focus on financial literacy. Personal finance needs to be taught in schools; the next generation must be equipped with the tools to control its own financial destiny and to make the right choices. The alternative is stultifying and ultimately self-defeating state paternalism.
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