Retailers, campaigners and business leaders across Shropshire today gave a mixed reception to Gordon Brown’s final Budget, branding it a headline-grabbing mixture of “smoke and mirrors” that would do little to help lowest earners and small firms.
Although the 2p reduction in the basic rate of income tax brought huge cheers in the Commons, there are fears it will be more than cancelled out for lowest earners by the scrapping of the 10p tax rate.
Shropshire tax consultant Duncan Montgomery, of Shrewsbury chartered accountants Whittingham Riddell, said: “Although there are some headline grabbing initiatives, many of these have been announced before, or won’t actually kick in until a later date.
“The 2p reduction in income tax rates is largely offset by the loss of the 10 per cent band for the first £2,150 of earnings that currently exists.”
There was mixed news for business, he said. “Although the corporation tax rate for large businesses has been reduced to 28 per cent from April 2008, the phased increase in tax for small businesses to 22 per cent will hurt many smaller local companies.
“The budget is one of headline-grabbing promises, many of which will not be delivered until at least April next year. Small businesses are hit hard, discouraging investment at all levels. However, for most businesses, structuring can give rise to significant tax savings if the right decisions are made, despite the budget.”
Stacey Millard, of SA Millard Newsagent in Ellesmere, said the rise in duty of 11p on a packet of 20 cigarettes was stupid, adding: “If the Government wants to ban smoking, they should just ban it altogether.”
Fay Easton, director of Shropshire Enterprise Partnership, criticised tax rises, to be phased in by 2009, for small businesses.
She said: “The message we are getting is that small enterprises are helping to transform the economy and this is not the kind of measure that will encourage them. I don’t think this budget is a very good indicator as far as small business is concerned.
“I would have liked to have seen more tax breaks to help encourage smaller businesses to grow and people to start them up.”
She said allowing tax relief on up to £50,000 of capital investment for small businesses was “of no use unless you have that kind of money to invest. Many one-man companies who are just starting out, don’t.”
Karen Davies, chief executive of Heart of England Fine Foods, said the rise in fuel duty would be felt by businesses across the region in all sectors, adding: “Although this is by no means a ‘green’ Budget, the Chancellor is sending a clear message that we all need to get more efficient with our transportation.”
Ludlow MP Philip Dunne described the Budget as “smoke and mirrors stuff”, adding : “You can give Gordon Brown marks for craftiness.”
The Tory MP added: “Optically, he’s made it look attractive, but he fiddled the presentation by making it look as though he was making tax cuts while many will actually be getting increases.
“It’s also extraordinary that he’s widening the income differential by penalising the poorest families - particularly those without children - and benefiting Middle Britain to a modest degree.
“In most cases the reduction in income tax will be wiped out by the elimination of the 10p tax band.
“For business, he is benefiting the City at the expense of manufacturing.
“In rural Shropshire where we still have some capital intensive industries, I’m not sure that will go down well,” said Mr Dunne.
Telford MP David Wright branded it a “Budget for Britain’s families, showing Labour is best for Telford”.
He said: “Gordon Brown announced that spending on public services is set to increase with spending on education rising to its highest ever level.
This will be good news for schools here in Telford and confirms that education remains Labour’s number one priority.
“And there was good news for hardworking families as well with more help with the costs of bringing up children.
“Labour passionately believes that every child deserves the best possible start.
“The contribution of those who have built our country was also recognised.
“Increases in pensioners’ tax allowance will take 600,000 pensioners out of paying income tax altogether, as we move forward to restore the earnings link for the basic state pension.”
Montgomeryshire MP Lembit Opik said Mr Brown’s Budget was a “steady as she goes” offering which did not tackle the deepest economic problems facing local people.
“This was an opportunity to reverse the trend of widening inequality, combat the personal debt crisis, tackle child poverty head-on, switch our tax away from people and onto pollution and invest in a sustainable and prosperous green Welsh economy,” he said. “But the Budget means the poorest in society will pay a higher percentage of their income on tax than the richest.
“Even the cut of the income tax rate to 20p is achieved by abolishing the 10p rate, which stands to make a number of less well-off people even worse off.”
The Liberal Democrat Party welcomed the basic rate tax fall but branded it a cut for the wealthy dressed up as a tax cut for the poor.
By Carl Jones, Henry Carpenter and Neil Thomas
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