A study released this morning by the Centre for Policy Studies has found that the UK fails to produce “billionaire entrepreneurs” due to high taxes and an excess of red tape, which stifles innovation. The authors of the research, Tino and Nima Sanandaji, have stated the Government need do little aside from cut taxes in order to foster a new generation of “SuperEntrepreneurs.”
Nima Sanandaji, writing in the Telegraph, points out the Government frequently makes the mistake of assuming self-employment and entrepreneurship are one and the same:
“When the Bank of England recently announced that [a] record 4.5 million Britons are now self-employed, Iain Duncan Smith claimed that this was evidence that the Coalition was “reviving Britain’s entrepreneurial spirit”.
“The Work and Pensions Secretary was conflating self-employment with entrepreneurship. In reality, the two are quite different – and policies to encourage one do not necessarily foster the other.”
Sanandaji points out freelancers and contractors are often individuals looking for a more modern way of working, but will likely not contribute to job creation:
“The reason for the politicians’ confusion is that self-employment is easily measured, while entrepreneurship is not. Indeed, entrepreneurialism is difficult to quantify.”
“We should recognise that most of the self-employed do not have the ambition to build such companies. Yes, they have some characteristics in common with entrepreneurs and play an extraordinarily important role in the economy. […] However, they do not generally seek to shoulder the role of an entrepreneur, driving innovation, challenging the status quo and going for strong business growth.”
Hong Kong ranks top for creation of “SuperEntrepreneurs”, with roughly 3 per million citizens. The UK ranks 11th, with around 0.5 per million citizens, while the US ranks third with around 1.5 per million. The report concludes that high taxes, in particular Capital Gains Tax, inhibit high-growth entrepreneurs, and in turn prevent them creating jobs. The Centre for Policy Studies calls for an overall reduction in red tape for entrepreneurs, and a dramatic lowering of taxation to encourage wealth-creating entrepreneurs in the UK. The Centre was founded in 1974 by Margaret Thatcher.
Photo by Sam Howzit