All the articles I read are about various ideas that George Osborne could use in his budget tomorrow. I have read some really nutty ones, Richard Murphy seems to think all our woes can be solved simply by taxing everyone and anything that moves - its an interesting concept!
So here is my reverse prescription - things I am dreading come to pass, but probably will....
1. No more cuts - yes indeed, we need more cuts, more cuts to quango's more cuts to crazy subsidies of green energy, more cuts to overseas aid, more cuts to Vince Cable's empire, more cuts to Trident, more cuts to rail subsidies, more cuts to NHS bureaucracy and its budget, more cuts to public sector pensions.
2. Personal Tax Rises - Tax take in the UK stands at one of the very highest levels in the Western world, very nearly 50% of GDP. It is not sustainable to demand more from anyone, rich or poor. Tax rises alone are responsible for dragging GDP down as they reduce personal income and reduce consumer spending.
3. Tinkering Gimmicks - Tolley's tax guide is 11,000 pages, hwo is this possible. yet every budget since Brown became Chancellor has resulted in ridiculous gimmicks. Of course, when there 11,000 pages of tax law, there are a lot of loopholes and contradictions - so these need fixing by the clever bods in HM Treasury and so they fiddle. The fiddling makes things worse and worse and the Press pick up on it - disastrously last year for George Osborne. So this year I want to see streamlining, but that is not the way of a Government bureaucracy.
4. Massive Nuclear Subsidy - We have all been waiting, especially my esteemed colleague Mr Drew, to see how far over the Government will bend to accommodate new Nuclear power stations with massive subsidies. What better time to announce it than in the budget, a nice large lump of money to support a French state owned enterprise perhaps......
5. North Sea tax raid to fund Retail petrol 'tax cut' - This is one of the worst decision made by the Chancellor in 2010. Destabilising the North Sea cash cow has cost the country nearly 3% of GDP and tens of billions in tax revenues - all for 3p 'off' retail petrol prices. Sadly, i can see the ruse happening again as the Government seeks to hurt businesses over voters.
What other potential horrors have I missed?
I am expecting a rise in the standard rate of income tax, or a substantial cut in the 40p threshold. Or perhaps another ha'penny on NI? This will be billed as for funding "investment".
ReplyDeleteI would expect a removal of the higher and upper rate relief on pension contributions, or a very much lower ceiling.
Some other stupidity to match the pasty tax. Nobody can predict these things, but there will be at least one, knowing George. Newspaper tax? One off poll tax? Savings account raid? Windfall tax on payday loan companies? Spare room tax for home-owners?
I'm expecting a "do nthing" budget. Coalition to weak for anything else.
ReplyDelete"and to fund this cut in the basic rate of tax, I am auctioning off the state owned broadcaster and expect to raise £6 billion.
ReplyDeleteMr Speaker, this will also reduce everyone's personal tax bill by the abolition of the tv licence fee, saving each householder £146 a year..."
'Do nothing' but spend a long time about it - we are too far from an election for any giveaways, and thanks to a push-me-pull-you coalition simply moving the furniture around...
ReplyDeleteLooking at the numbers for other countries, I don't find the Personal Tax Rates argument strong. If it is, you'd expect Russia with its top 13% income tax rate to be roaring away! Just compare our top 45% rate with:
ReplyDelete50% Japan
47% Germany, France, Australia, Canada
44% New York
42% USA average including state tax
There's a handy table of these in the 2012 Budget doc on page 31.
Perhaps we should drop VAT a little to lift demand?
Do those other countries have national insurance schemes ? another 11% added to all of UK ax bands.
ReplyDeleteMansion Tax - on any couple in anything larger than a one-bed flat.
ReplyDeleteAnd then a windfall tax on single people luxuriating in the same.
Abolish "Tax and Spend" and replace with "Spend and Spend" - to get the economy moving.
All of the above to be announced as an aspiration for the next parliament.
Apart from booznfags, I think we'll see the start of nannying on food. Generally, though, a steady as she goes budget.
ReplyDeleteAs Anon states, our top rate of tax is not 45p at all. Apples, pears.
ReplyDeleteJapan's overall tax take is very low, it just runs a joke deficit financed by Japanese savers too jingoistic to invest abroad.
Most of the other "major" countries have lower tax:GDP ratios than we do which I think was CU's point. Britain was regarded as a low tax country in the 1990s. Thank you Gordon.
One thing I do not expect George to be doing in his speech (although three years in I still can't understand why) is highlighting how much spending surged for so little gain since 2001 and how even after his CUTS!!!!* public spending will be very very high.
* copyright BBC.
Anon, re NI. For pay in the highest tax band, the employee's NI contribution is 2% not 11%, making 47% tax+NI marginal rate.
ReplyDeleteEmployer's contributions are 13.8%, less 3.4% if contracted-out. Don't know what comparable foreign contributions are, but you'd have to factor in health insurance costs - it looks hard to produce a fair comparison. In the US employers who offer family health insurance pay around $14,000 per employee, or $5000 for a single person. US self-employed pay around 15% of net earnings for health care insurance.
And while we are all looking the other way....
ReplyDeleteIrish Presidency secures landmark deal on single bank supervisor. "The Single Supervisor is the core element of banking union and a vital step in breaking the vicious link between the banks and the sovereigns."
un article très important et très divers puisque il traite un ensemble de caractéristiques très importantes.
ReplyDeleteIt depends who wrote the budget.
ReplyDeleteIf it was GO, expect little change, but a few cheap tricks.
Like
- End the ringfencing on DFID, labour will cry tears of the hungry in Africa, the cons will say they are standing up for the UK.
- and a lot of bad ideas.
If Cameron wrote it, with his new strategist, we might get a retreat from the marginal flim flam and the announcement of 2-3 core ideas that can be used to encapsulate con (business friendly) values
Like
- No more ringfencing
- Commitment to not put tobin tax on financial transactions (some stability would be good)
- A serious kickstart for industry (announcing new nukes, shale extraction green light, severn barrage)
- Not a mansion tax, but something that people, usually foreigners will have to pay on expensive homes - it is always cheap and simple to tax immovable physical property.
Whenever I hear that the State should spend more during the recession, I always reflect on this little scenario:
ReplyDeleteWhen a fantastically able chancellor was appointed,let's call him GB, the word he most used was Prudence. Everybody loved Prudence, and how could they not?
But suddenly, Prudence was sent to the naughty corner and GB started spending other peoples' money by the shedload.
This really galvanised the economy and ended boom and bust.
Everyone now remembers that Prudence was a naughty girl and, if only GB had spent like a madman at the start of his reign, we wouldn't be in this position now...
jm, on the Beatles White Album "Dear Prudence" is followed by "Looking through a glass onion". Seems appropriate.
ReplyDelete"Anon, re NI. For pay in the highest tax band, the employee's NI contribution is 2% not 11%, making 47% tax+NI marginal rate."
ReplyDeleteThe way I look at it is this. Of GDP about 1/3rd is spent by government. That means 2/3rds is generated by the private sector. Thus the public sector is half the size of the private sector. This means you have to tax the creation of wealth at a rate of 50% to support the spending of wealth by government.
Since you can really only tax labour, all of this tax must be born by the working class and the middle class, because they are the only ones actually producing anything. So, the working class and the middle class must be paying tax in total at 50% rate approx. When you consider income tax and VAT together, plus a plethora of other "stealth taxes" I think you can see that working people do indeed pay about 50% of our wealth in tax.
Personally I don't like talking about "wealth" or "money". I prefer to consider that time = money therefore 50% of our wealth being taxed means 50% of my time I am giving up so that the underclass and the very rich don't have to work. 50% of my life, starting from the very best years of my life, given up to those that don't appear to deserve it.
Now, you would think that in a democracy the middle class and the working class would unite to force change in their favour to correct this obvious unfairness. So you might want to consider why the political parties have split so as to draw their support from (upperclass +upper middle class) and (lower middle class + working class + underclass). It clearly suit somebody, could it be those that are funding the two main parties?
j'ai bien aimé cet article très important et bien fait pour faire une recherche très intéressante.
ReplyDeleteThis is really an interesting topic. i enjoy reading it so much. thank you for sharing that kind of articles."All the articles I read are about various ideas that George Osborne could use in his budget tomorrow. I have read some really nutty ones, Richard Murphy seems to think all our woes can be solved simply by taxing everyone and anything that moves - its an interesting concept!"
ReplyDeleteI have read some really nutty ones, Richard Murphy seems to think all our woes can be solved simply by taxing everyone and anything that moves - its an interesting concept!
ReplyDelete2. Personal Tax Rises - Tax take in the UK stands at one of the very highest levels in the Western world, very nearly 50% of GDP. It is not sustainable to demand more from anyone, rich or poor. Tax rises alone are responsible for dragging GDP down as they reduce personal income and reduce consumer spending
ReplyDelete'"3. Tinkering Gimmicks - Tolley's tax guide is 11,000 pages, hwo is this possible. yet every budget since Brown became Chancellor has resulted in ridiculous gimmicks. Of course, when there 11,000 pages of tax law, there are a lot of loopholes and contradictions "
ReplyDeleteMassive Nuclear Subsidy - We have all been waiting, especially my esteemed colleague Mr Drew, to see how far over the Government will bend to accommodate new Nuclear power stations with massive subsidies.
ReplyDelete. North Sea tax raid to fund Retail petrol 'tax cut' - This is one of the worst decision made by the Chancellor in 2010. Destabilising the North Sea cash cow has cost the country nearly 3% of GDP and tens of billions in tax revenues -
ReplyDelete