Cameron's UK Tax Con

11/11/08 - Stumbling And Mumbling   --> Source

The British Tories (conservatives) propose an employment stimulus package. [edited]

The Tories’ call for tax breaks to employers is a scam. A fiddle. A con. A fraud.

They propose that firms be given a credit against national insurance contributions, who take on a worker who has been unemployed for over three months. This will be £2500 for a full-time worker, and less for a part-timer. They claim this will create 350,000 new jobs, and that the plan will pay for itself in savings on unemployment benefits.

Nonsense. This ignores the enormous deadweight cost of the plan. Hundreds of thousands of jobs are created every year even in declining industries or in recessions (pdf). By the Tories own figures (pdf), 1.5 million people unemployed over three months were reemployed during the 1991 recession.

September this year had the biggest rise in net unemployment since 1992, yet 227,400 were reemployed. This huge job creation means the Tories’ plan gives taxpayers’ money to employers for doing what they would do anyway. That’s not revenue neutral.

If this plan were implemented the Tories could no doubt point to tens of thousands of claims for the tax credit. But, these claims would consist mainly of jobs created anyway, not of jobs created by the plan.