Is the British government giving and creating too many tax breaks? And are we to assume that these tax relief schemes are helpful to the economy?
Economics writer Phillip Inman asks this provocative question in his article in The Guardian which has an attention-grabbing headline: “There are now more than 1,000 tax relief schemes. Give me a break.” Many of the populace would at first glance of the title without reading through the text under it. And they might themselves ask why Inman is apparently complaining in the first place.
Tax cuts do boost the initiatives in certain industries and provide the needed lift to their progress. One of them is a tax break given to British companies. It will allow them to claim 40 percent of their losses through their tax returns. Another is geared for pension plans. This particular tax break would encourage the elderly to set aside their now diminishing earnings for a safe nest egg. Inman goes to say that the British government has about 1,140 tax schemes. These cover a lot of industries as well as the financial plans and programs of the populace.
Overflow of tax breaks
Inmans’ concerns are focused on the wisdom of having too many tax breaks, and the lack of wisdom in not investigating their practicality or relevance. Before anyone breaks into a cry out of outrage, he points out that should a huge part of these tax breaks be shelved or cut, the government would stand to earn £100 billion more in its coffers.
This, in turn, can be used for public infrastructure, transport, education, and other services important to the people. He also wonders if indeed the entire British society would just freeze if all tax breaks were to end. Would the small business owners stop making their products? Would filmmakers halt in creating movies? Or would corporations pack up and immigrate to more tax-friendly foreign lands?
No ally has come forward to back Inman’s issues. The closest he has to a kindred spirit is Republican legislators who sliced budgets and tax cuts in faraway Iowa. According to the Gazette, all these tax breaks could have amounted to another $12.1 billion in annual revenues—which a state like Iowa, earning $7.2 billion a year, simply could not afford. Certain public sectors were not happy with the position that the legislators had taken, but so far, no one could dispute the numbers.
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