According to an analysis by thinktanks Demos and Common Wealth, the UK’s full expensing tax break will cost nearly £30 billion in lost tax revenue, producing only about £10.5 billion in new investment. This stark discrepancy illustrates that despite substantial taxpayer costs, the anticipated boost to business investment has not come to fruition as hoped.
Andrew O'Brien, policy director at Demos, stated that 'full expensing is not the silver bullet to boost business investment that some had hoped.' This underscores the ongoing debate regarding the effectiveness of such tax incentives on driving genuine economic growth.
A Treasury spokesperson promised that this measure is part of their vision to lead the 'most pro-growth Treasury in the country's history.' The statement emphasized the government's commitment to unlocking investment opportunities, despite critiques of the actual outcomes of the full expensing policy.
This full expensing initiative was also introduced to address Britain's low level of private investment, which many economists argue has stunted productivity recovery since the 2008 financial crisis. The long-standing issue of inadequate investment in public infrastructure further compounds the challenge.
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