In a move that Republican candidates for Congress and the presidency might take note of, Britain’s Conservative Government yesterday unveiled its budget — pro-growth, cutting taxes on business and the nation’s highest wage-earners. Following budgets that focused on major spending cuts to tame the country’s record-high debt, the new budget “unashamedly backs business,” declared Chancellor of the Exchequer George Osborne, chief architect of the pro-growth manifesto.
The dramatic, tax-cutting budget comes as Britain is still on its austerity plan through which it hopes to close its deficit in seven years and the nation still faces a downgrade of its credit rating from two agencies. It is especially heartening to those on the right of the Conservative Party, many of whom have felt that Prime Minister David Cameron is more akin to centrist Conservative leaders of the past — notably Prime Minister Harold MacMillan — than to their heroine, Lady Margaret Thatcher.
But this latest budget of the Cameron government outdoes anything on the economic front that came under the “Iron Lady’s” reign. It could even be characterized as a British salute to Jack Kemp, the late New York congressman and 1996 Republican vice presidential candidate who led the Republican Party to embrace the concept of tax cuts as a means of raising revenue through the Kemp-Roth legislation of 1978 (which Ronald Reagan later turned into policy in 1981).
“Britain will cut its headline rate of corporation tax from 26 percent to 24 percent this year, and to 22 percent by 2014, making it the fourth lowest in the G-20 after Turkey, Saudi Arabia, and Russia,” noted the Financial Times, citing statistics from the Treasury.
In spelling out the budget, Chancellor Osborne proclaimed it “an advertisement for investment and jobs in Britain.”
The Osborne budget also cut the 50 percent income tax rate to 45 percent, in effect reversing a tax increase made by the previous government under Labour Prime Minister Gordon Brown.
To be sure, the budget is not entirely made up of tax cuts. To make up for an anticipated loss of revenue from the personal tax cut, Osborne offered a “stamp duty” of 7 percent on the sale of residential property priced at more than 2 million euros and a 15 percent levy on residential properties bought by companies. More than a few British political observers suspect that the budget would have been exclusively a “tax cutter” had it not been for the fact that Cameron and the Tories govern through the votes in the House of Common of the small Liberal Democratic Party and that “Lib Dem” leader and Deputy Prime Minister Nick Clegg had to go back to his party with something.
But what is increased in terms of specific measures to bring in revenue is more than offset by the overall cuts in taxes. Already, cries of class warfare have begun from the leftist opposition, with Labour Party Leader Ed Millibrand denouncing Osborne’s budget as a present “for his Christmas card list” (Oxford graduate Osborne is known for his personal Christmas card list with over 1000 card recipients).
Britain now will have a spirited debate over concepts of an “opportunity society” and “tax cuts” for the rich. In the U.S., one would think it all sounds familiar — and that Jack Kemp is now smiling.