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The United Kingdom Budget.

According to the Chancellor his budget will raise five times more revenue from the wealthy than the cut in the top rate of income tax from 50% to 45%.

Accept that the increases in property taxation will occur at once – and the cut in the top rate of income tax (and a rise in the threshold at which the poor start paying tax) will occur in April 2013 – i.e. (at least as regards the reduction in the top rate of income tax is concerned) will not happen at all, as the political conditions in April 2013 will make a “tax cut for the rich” impossible.

So the government has got all the political heat for a “tax cut for the rich” without getting any economic benefit by actually reducing the top rate of income tax. Indeed taxation on the weathy will increase.

The Chancellor has also said that on top of his large increases in taxation on property (targeted at wealthy individuals and companies) he will “not hesitate to take retrospective action” if any individual or company is, in his judgement, not paying “enough tax”.

Also study on a general “non avoidence rule” for all taxation (not “just” property taxation) so that people who have obeyed every word of the thousands of pages of tax regulations can still have more money taken from them without any specific legal authority to do so.

However, there is a good side to the budget.

For example, there will be a small (but welcome) reduction in company taxation.

And there is now a tax allowence for video games and animation.

As the Chancellor said….

A central aim of his budget is to “keep Wallace and Gromit where they are” (if I have mispelled the title of this show I refer readers to the Chancellor, who is an expert upon it).

So that is O.K. then.

9 Comments

  1. Paul Marks says:

    Oh I forgot….

    The tax increase on fuel is to go ahead as planned, and there is to be a higher tax on smoking.

    And there is going to be a “grandmother tax” (the loss of some tax relief or other).

  2. RAB says:

    Doesn’t “keeping Wallace and Gromit where they are” refer to iDave and the boy Clegg, rather than the fine Bristol based animation team?

    If so, this dogs breakfast of a Budget isn’t going to do it, is it Gromit? “Fancy some more cheese old lad?”

  3. Paul Marks says:

    You may be correct RAB.

    And already the left (and the msm – including Sky News as well as the BBC) are stressing the “tax cut for the rich” bullshit.

    The fact that taxation on the wealthy has just gone UP will pass most people by (after all who is reporting it?).

    If I took (by force) five Pounds from you – and promised to give you one Pound back (next year). Would you be pleased?

    Meanwhile everyone else is being told that I have corruptly given you something that belongs to them (which is how “tax cuts for the rich” are presented).

    Meanwhile REAL subsidies for the rich go totally unnoticed.

    I recently encountered a “Conservative” who told me what a lovely country Cuba is (he was just back from his holidays) and how it had enough domestic oil for its own use (if so why does Chevaz have to keep giving them oil?), and then told me how evil the vile Jews were in Israel…….

    Anyway, this charming individual told me how much he hoped the “Export Guarentee Scheme” would be expanded in the budget.

    So I kept on the alert for this particular piece of corporate welfare……

    And, lo and behold, the subsidy-for-politically-connected-corporations scheme was indeed expanded.

    What a lovely world we live in RAB.

  4. The ‘grannytax’ is a freezing of the tax allowance for those over 65.

  5. Lynne says:

    I remain underwhelmed.

  6. Paul Marks says:

    Thank you Ian (not that one) – it washed over me (I was a bit punchdrunk during the speech).

    Yes as many people (even the Cameroons house newspaper – the Daily Telegraph, from which most conservative writers were forced out some time ago) the government has increased taxes on the old who have an independent income.

    The government’s “defence” is that they have increased the state pension – indeed increased it more than the new tax will raise.

    So the government wishes to stop people saving for their old age (that is the logical conclusion from taxing the income that the old get from their investments) and to discourage them from working – the old most be totally dependent on the state.

    But where is the money for business investment going to come from if no one saves?

    Have no fear – the government has yet more schemes for government backed loans (on top of the orgy of Bank of England credit-money creation).

    After all the government itself is already borrowing twice as much as it said it would – excluding “exceptional items” (errr….)

    As Nick pointed out to me – the press were far more interested in the Dutchess of Cambridge wearing a blue dress, than they were in the confirmation that government spending was totally out of control.

    “Savage Tory cuts” indeed….

    Lynn why are you underwhelmed?

    You do understand that this is the begining of the end, do you not?

    Although as it was so obvious that things were going to go down the plughole I can understand your not being shocked by it.

  7. No – not those with an independent income – everyone over 65 will see their personal allowance frozen. I didn’t realise, but if you are over 65 the personal allowance was higher than for the rest of the population. I should have known, since I’m over 65, but it had escaped me.

    The wider issue to me is not tax cuts or tax increases. Unless you are an anarchist, then whatever limited role you assign to the state has to be paid for. How you make the transition to that reduced level of state activity and who you give priority to as you do so, says a lot about your view of the world. It is clear already that Cameron and his crew are more interested in ‘their Christmas card list’ than they are willing to admit – which to be fair applied to the budgets of Brown and Darling too.

    There is a lot of empty rhetoric being spouted in the press and in blogland. Nothing new there of course, but it does obscure what is really happening.

    It doesn’t matter that the top 10% of tax payers pay 50% of taxes (or whatever the figure is). What matters is how the distribution of tax paid compares with the distribution of gross income. If the top 10% of tax payers earn 40% of the money but pay 50% of tax then they are paying more than their share. That would be a statement of fact, not of ‘fairness’. I have no idea what the real position is because politicians do not like clear factual statements – they like to obscure the truth. See for example Brown and the 10p tax rate and in this budget the reduction of the 50p rate to 45p at the same time as bringing down the point at which the rate applies.

    Politicians also lie. The ability to lie is part of the job description. I have no doubt that this budget, like most budgets I have paid any attention to over the past 50 years, contains many lies and much in the way of misdirection.

  8. Paul Marks says:

    If only politicians were just corrupt liars – things would be so much better than they are.

    “Their Christmas Card lise” – errr those are the rich people who have just had their taxes INCREASE (do I really have to go through the property taxation thing again).

    “Government has to be paid for…”

    Government whose spending eats up about half the economy (and whose regulations messes up the rest of it) can not be paid for, it is not sustainable (in no way).

    That is the point.

  9. Roue le Jour says:

    Chancellor of the Exchequer: member of the elected government whose job is to extract from the economy whatever sum the permanent government demands. How he does it is, however, entirely up to him. Bless.

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