Wednesday, March 21, 2007

Brown raises Income Tax

OK, Iain says I should be live blogging so here goes. I cannot deny that I have started sticking knives in my arm because of boredom, but some interesting observations.

  • Prescott is definitely eyeing up Gordon Brown's arse and occasionally licking his lips. (Iain stole my joke!).
  • Most of the Cabinet hasn't managed to get a seat and are all standing at the back. This is good so they now know what it's like to stand up for over an hour and be bored like we commuters do.
  • Every time Brown announces something about department X it cuts to the relevant minister who is on tenterhooks wondering whether they are about to be screwed. But he's not a control freak honest.
  • Brown has decided to keep the zero rate for road tax on the cars that either don't get made anymore or cannot be bought here.
  • As expected he is increasing tax credits. At the same time he claims he wants to "reward saving". So he's a liar.
  • He's re-packaged and re-announced the YTS/New Deal. Basically he's done a "partnership" deal with Sainsbury, Tesco etc who have agreed to "maybe" take the people in the scheme on. So no change to the way the New Deal worked at all.
  • Apparently, we married people just need transferable allowances on Capital Gains Tax. What normal family person ever has to consider capital gains tax?
  • Oh look, here's the big one. A 2p cut in the basic rate of income tax to 20%. But given he's just scrapped the 10% tax rate altogether he's just off-set it and dragged a ton of people into the 20% tax rate. He's basically just increased income tax whilst making it look like he's cut it.
Ok, made a mistake earlier with some allowances. Have recalculated. Basically if you're poor you're income tax has gone up, if you'r not poor (but not rich) you're income tax has gone down. Coupled with the realignment of NI, it's a tax raising budget. Incidentally, should anyone mention tax credit increases they are a misnomer because they assume that everyone takes them, and not everyone does.

We should also note that he didn't mention the tax free allowances remaining pretty much static and certainly not in line withe the retail price index inflation rate which is the one that we ordinary people experience at the coal face. With a 0% inflation rate he is increasing income tax, add in the 4+% RPI and you have an even harder pinch on the lowest earners, thereby increasing their reliance on the state for handouts. Further encouraging the culture of dependency.

12 comments:

Rickytshirt said...
21 Mar 2007 14:01:00  

I think this means another £500pa tax from my measly £14,222pa.

Newmania said...
21 Mar 2007 14:07:00  

Crickey you are quick.

Rickytshirt said...
21 Mar 2007 14:19:00  

I'm only taking income tax into account.

Alan said...
21 Mar 2007 14:36:00  

This budget is all spin and no trousers. There is a marginal reduction for someone earning £20,000, but everyone else has a rather large tax increase. If taking into account the NI reforms as well, someone earning £30,000 will have a tax rate increase of ~0.7%. On hte other hand, someone earning £10,000 has their tax rate increase by 1.7%

Don't fall for the spin - it isn't a 2p rate cut at all!

SimonW said...
21 Mar 2007 15:19:00  

The tax allowances are increasing. The change in them was announced at the timre of the pre budget report, but he is going to increase them over and above indexation in 2008/9, pushing the point at which the 40% tax kicks in, but this increases the amount of income that NI at 11% is paid on.
HMRC Income Tax

Adam said...
21 Mar 2007 16:22:00  

What's this, 'Hug a poor person' week?

The problem here is tax increases; the market will take care of who gets paid what, if the government kept it's grimy fingers out of it, but spending should be cut to keep taxes low. Spending should be the issue.

dizzy said...
21 Mar 2007 17:38:00  

no Adma, it's tax that matters.

Adam said...
21 Mar 2007 19:41:00  

Taxrates have to be set to cover funding. There is, of course, debate to be had about the distribution of the taxes (who will pay them, for example) but this tweaking is just fannying about. Spending is what counts, because sooner or later, it has to be paid for; that's the reason that 'taxes' are as inevitable as 'death'.

dizzy said...
21 Mar 2007 19:58:00  

What you say isn't wrong Adam, but in this budget, tax is what was important over spending. Yes spending must be under control, but spending really wasn't what this budget was about.

Adam said...
21 Mar 2007 20:37:00  

In the short term, tax is what we see, sure. In the long term, though, spending drives taxes. What bothers me about budgets is the way that spending is generally portrayed as a positive thing.

Did that 'government gives every kid a nest-egg' thing go ahead, incidentally?

The tax credits idea probably sounded attractive before it existed, I guess but, man, when you start writing social policy with taxbreaks, you can end up with an unholy mess. Which reminds me, I have to do my own taxes this weekend.

dizzy said...
21 Mar 2007 20:45:00  

Credits are not tax breaks. They are benefits. You have to fill in a form and they pay them back to you in cash payments

Adam said...
22 Mar 2007 02:07:00  

Ah, here, they have the Earned Income Tax Credit, where they give tax back to poor people at claiming time. That can be done because everyone here has to file taxes.

The tax system here is somewhat complex. And by 'somewhat', I mean 'enormously'.


 

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