Good news for those of us who want to see a re-capitalised and re-localised economy in budget 2010.
On the first front, the Chancellor has pledged to remove the stamp duty on property transactions under £250,000 for new buyers. As David Cameron was right to respond, this represents
another policy stolen from the Conservatives, although the electorate may rightly feel that stealing good policies from rival parties is in and of itself good policy. What's worse for those who argue
for lower taxes, “this relief will be funded in an increase in the stamp duty on residential property over £1 million.” Homes remain a popular and significant asset across all stratum of society, and as such are already more evenly distributed than any other type of asset - such as cash savings or, significantly for this budget, business investments.
If reducing the stamp duty threshold to disperse capital was the big policy of this budget, supporting new small and medium enterprise (SME) investment was the big theme. Making credit available to would-be entrepreneurs was pursued on multiple fronts: through lending commitments from semi-state-owned RBS and Lloyds (worth £94bn and "almost 50% of that will go to SMEs"); through a statutory appeals process for those denied credit; through crucial new entrants in the banking sector (five new banks are in the process of registering with the FSA) and a streamlined procedure for market entry; and through a new national investment corporation called UK Finance for Growth. On top of this, SMEs can expect a twelve month cut in the business rates and a doubled entrepreneurs' relief for Capital Gains Tax. This will mean that 500,000 SMEs will pay reduced taxes, including 350,000 of which that will pay no tax at all.
While many will argue that this represents too little (hardly delivering financial reform radical enough to merit the FT's prediction of
pay-back time for banks) and too late, implementing this budget would remain a step in the right direction for building an asset-owning economy.