While Dr Parkinson’s speech on Friday attracted attention for his controversial comments on payroll tax, I found the boom in the agricultural sector forecast by Treasury the most interesting thing in the speech. This is a chart of industry shares of total gross value added:
Dr Parkinson notes:
The second wave flowing across our economy from the tidal economic shifts in Asia is in agriculture, as global demand for agricultural produce increases. We’re likely to see a significant increase in demand, particularly from China, for high-end agricultural products like fruit, dairy, high-grade meat and seafood.
I posted on a similar prediction from an agribusiness expert a couple of weeks ago (see Asian growth boosts our agricultural sector).
On Dr Parkinson’s payroll tax comments, I agree with him that the incidence of payroll tax largely falls on workers through lower wages. But even though it may not be the job destroyer some claim, it is still an inefficient tax (e.g. through discouraging labour supply), as made clear by analysis KPMG-Econtech undertook for the Henry Tax Review, which I posted on last year:
At least Dr Parkinson mentioned land tax as another possible area for reform. Land taxes are generally very efficient, because land can’t move to escape the tax.