New businesses would get big tax breaks for job creation under Conservative proposals announced today. George Osborne told the Tory party conference  that 60,000 jobs would be created by the scheme, intended to encourage investment in new ventures. The Shadow Chancellor said that employers creating new jobs would not have to pay National Insurance contributions for the first two years of a Conservative government. He estimated that cutting the charge, which amounts to 12.8 per cent of an employee’s salary, would cost the Government around £250million a year.

“We will send a message loud and clear that this country is open for business,” he said. “Invest here, set up your business here, come and make your enterprise here and we will support you.” Mr Osborne said the tax cut would be funded by savings to be announced during the remainder of the conference. “This is just another example of the Conservatives being the party of jobs at a time when Labour are the party of mass unemployment,” he said.

The exemption would apply to the first ten employees hired by a business during its first year, up to the upper earning limit of £844 a week per employee, or about £44,000 a year. Osborne calculates that a new small business with ten employees on an average salary of £25,000 could save up to £25,000 a year at current tax rates.

Well-intended this might be, but the proposal is proof positive that the Conservatives' policies are no more grounded in principle than Labours'. The scheme itself could indeed be expected to produce new jobs, but

EMPLOYERS' BURDEN OF TAX 2008/9

Tax Rates
				% of
Employers NI				Gross	max
a	£0.00	---	£5435.00	0%	£0.00
b	£5435.01	---	no limit	12.8%
Employees NI
a	£0.00	---	£5435.00	0%	£0.00
b	£5435.01	---	£40040.00	11%	£3806.55
c	£40040.01			1%
Income Tax
a	£0.00	---	£6035.00	0%	£0.00
b
c	£6035.00	---	£34800.00	22%	£7656.00
d	£34800.01	---	no limit	40%
Self-employed NI
a	£0	---	£5435.00	0%	£0.00
b	£5435.01	---	£40040.00	8.0%	£2768.40
c	£26000.01	=	no limit	1%

GROSS PAY/INDIRECT TAX PAID

Gross Pay	Indirect Tax
10000	30%
20000	23%
40000	20%
50000	20%
60000	20%
70000	18%
80000	18%
100000	14%
500000	14%

Adam Posen, the newest member of the Bank's Monetary Policy Committee, has said that the Government should consider imposing extra taxes on properties, suggesting that in future homeowners should have to pay an extra charge if prices rise too fast. He suggested that this may mean imposing capital gains taxes on first homes and raising stamp duty.

What are we to make of Gordon Brown's conversion to the wonders of a tax on financial transactions? Test it against the Maxims of Taxation, as put forward by Adam Smith. Here they are - judge for yourself.

On the day of the 2010 Budget, we are pleased to introduce our new expert commentator, leading economist Charlotte-Anne Schreiber. She was delighted to be invited to the press box in the House of Commons to hear the budget speech. Although she found it confusing and contradictory, a promise right at the end of the 90-minute dissertation gave her hope that at long last a Chancellor had realised where taxation can be levied that would transform society and establish economic justice for all. Here is her first report for the Land Value Taxation Campaign.