Worthwhile use of Chancellor’s power
CONSERVATIVE Chancellors have not been renowned in recent years for providing a stimulus to the economy.
The main drift of their fiscal activity has been to limit public spending as part of an austerity drive to reduce the UK’s indebtedness – the consequences of which have been spending cuts and job losses for our public services.
Rishi Sunak’s announcement of a package that includes a cut in VAT aimed at encouraging people to spend money on food in restaurants and pubs is a worthwhile use of his powers.
The additional subsidy of up to £10 per head for those eating out between Monday and Wednesday in August is another bonus for diners and for the venues.
The hospitality industry has been hit horrendously by the lockdown and deserves extraordinary measures to be implemented in a bid to save businesses from closure, with the massive job losses that would entail.
Of course, Wales is not as far advanced in easing the lockdown as England, because of concerns on the part of the Welsh Government that relaxing lockdown measures too quickly could result in the further spread of the virus.
But so long as social distancing rules are respected, and people behave sensibly, we in Wales should soon be able to take advantage of the hospitality tax concession in the same way as those in England. The tax cut also applies to hotel and self-catering accommodation, as well as to visitor attractions, providing what is hoped to be a significant boost to tourism.
Unlike VAT, the tax on house sales – known in England as Stamp Duty and in Wales as Land Transaction Tax – is devolved. The Welsh Government will have to make a judgement as to whether the best use of the money it receives from the Treasury will be to match the UK Government’s decision to scrap the tax for house sales under £500,000. There’s no doubt that the housing market deserves a stimulus too, although given the generally lower house prices in Wales, it may be that £500,000 isn’t the most appropriate threshold for this side of the border.
Inevitably, there are voices saying that the tax breaks and meal subsidies don’t amount to enough. It’s certainly important that Mr Sunak retains the flexibility to do more. The answer to those who raise concerns about the cost of these measures is that mass unemployment would do real lasting damage to the economy and people’s livelihoods and welfare.