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[21 MAR 00] UNIVERSITY OF WARWICK NEWS
Warwick Professor Slams Budget
BY ANTONY HOPKER

Professor Andrew Oswald, University of WarwickA University of Warwick economics expert has criticised the Chancellor’s budget as "not very exciting or interesting".

Professor Andrew Oswald said some of the ideas put forward by Gordon Brown were flawed and went against the findings of research.

He sharply criticised tax breaks to allow employees to buy shares in their own company as it would create too large a risk for the people involved.

Prof Oswald explained that staff who bought shares in their own firm would be at risk of losing both their jobs and their savings if the company got into difficulty.

He said:

"Can you imagine what would have happened if the workers at Longbridge had all their savings invested in Rover.

"We need to encourage diversity and labour mobility."

Prof Oswald also said the increase in stamp duty to 3 per cent on houses costing more than 250,000 was short-sighted.

The Chancellor introduced the move to try and dampen down soaring house prices. But Prof Oswald said stamp duty should be abolished because of its long term impact.

He explained that while the threshold appears quite high at the moment, house prices will rise, and many more people would be affected by the increase.

The Warwick professor added:

"Before we know it, most of Britain will be in the higher tiered bands of tax, far above the one per cent, and politicians will forget to adjust the thresholds down.

"It is common to hear the argument that a one per cent tax is small so it does not matter. This is wrong. Most movers in Britain own only a quarter of the house they are buying. The rest is owed to the mortgage company. Then the effective tax is four per cent of the house owner's worldly assets."

"Stamp-duty taxes encourage workers to stay put when changing jobs. That means workers end up commuting further and further to work.

"If the aim is to reduce the size of house-price booms and busts, stamp duty will not work. It has a once and for all effect on the level of house prices, and probably no major influence on underlying volatility."

Prof Oswald said tax breaks for small and medium firms to buy computer equipment to encourage them to get involved in e-commerce were also illogical.

He said:

"I don’t see why the Chancellor of the Exchequer should be subsidising people to use computers."

And hit squads to get long-term unemployed people back to work were ineffective, he added.

He said:

"The research shows that they don’t work. Perhaps the Chancellor wasn’t aware of this research."

SEE: [21 MAR 00] HOSPITALS GET WELCOME BUDGET BOOST
 

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THE BUDGET
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PROFESSOR ANDREW OSWALD

UNIVERSITY OF WARWICK



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CWN / Education / University of Warwick / 21 Mar 00

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