The Express, March 15, Professor Patrick Minford
It attempts to offset the effect by a new regime of investment allowances that replace the “super deduction”. But the trouble with that is that productivity-raising innovation does not generally require physical investment on which allowances are based; its effect is seen eventually in intangible capital which attracts no allowances.
So the higher tax penalises productivity growth.
The Chancellor’s words proclaiming his devotion to growth are therefore highly misleading.
Yes, I welcome the abolition of the pension cap and the raising of the pension limits on tax-free contributions, and the extra support of childcare; also the new investment zones. These are helpful support measures.
But economic theory emphasises the key role of tax on productivity growth, the heart of the growth engine.
Click here to read the piece in full.