Forum for National Recovery: Investment needed for revival 'Higher taxes needed for revival': Taxes

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The Independent Online
HIGHER TAXES must form part of a national strategy for economic revival, Roger Bootle, economist at Midland Global Markets, told the meeting.

He was among several speakers to express severe doubts about the ability of UK politicians to lead the country back to economic prosperity, and their performance during the last election campaign and since.

'Can you imagine in a country such as Singapore or Japan a debate at an election about the country's economic future which seems to come down to whether a penny on income tax is more important than 50 pence on a pension?' Mr Bootle said.

To applause from around the hall, he said. 'I am struck by the appallingly poor quality of political debate in this country, and the first sign I see of people addressing this problem is this meeting today.

'The Government needs a plan for national revival stretching over a 10-year period or more. To raise taxes in our present position would be very dangerous, but there is a need to raise taxes in the medium term.'

Alison Cornish, chairman of the transport committee in the London Borough of Richmond, insisted that a sustained improvement in the quality of public services depended on increased levels of investment.

'The Government must come clean and stop pretending that we can have a better transport system, but not pay for it; better education by cutting school budgets; devolve community care to councils and pretend it will work without more money.'

Nigel Gell, a Lieutenant-Colonel in the Royal Engineers during the Second World War and later an industrialist, said capital allowances for industry should be doubled, and the business rate for small companies halved.

He maintained that the ordinary rate of income tax should be raised at once, and that the higher rate of 40 per cent should rise to 50 per cent.

'I will be told by Mrs Thatcher, the Tory party and Uncle Tom Cobley and all that the people won't wear it. I suggest they will wear it if we give leadership and inspiration that is so sorely lacking.'

Yves Bonavero, a French national who has worked in London for the past 15 years as a fund manager and charity worker, urged policy makers to pause to consider the 'pain of joblessness' which too rarely figured in economic debates.

'There are two to three million people who do not participate in the economic life of the country; many don't vote because they are of no fixed abode; their children are in care. People are living in tenements, on staircases, in cars. These people do not form part of our reflections any more.

'We are so mesmerised by the fall in our living standards of 2 to 3 per cent that these people - as many as 11 or 12 million of them across Europe - get left out of our debate.'

Giles Keating, an economist with Credit Suisse First Boston, suggested that the revenue that could be generated from road tolls and associated industries could make a substantial contribution to economic recovery.

Moreover, Britain was well-placed to exploit the emerging guidance system technologies that could enable cars and lorries to 'drive themselves' and to corner the global markets for products associated with them.

The money raised from tolls could be ploughed into a series of public limited companies exploiting these technologies which would eventually be floated on the stock market.

'The revenue from these could be used for investing in hospitals and schools without increasing the public spending borrowing requirement,' he said.

Rosemary Radcliffe, of Coopers & Lybrand, said the Government should go now for a more expansionary fiscal boost.

'This needs to be time limited and it needs to contribute to the long term interests of the economy.

'This means spending on infrastructure, on rail projects, housbuilding, repairs to schools and hospitals. These have the advantage of having a high labour content. I am less keen on short term tax breaks.'