I’ve just been down the road for a Coke and a packet of crisps. In the queue I glanced over the newspaper front pages. Paul has been proven 100% correct (see this and any number of other posts or comments by Paul here or Samizdata or elsewhere in which Paul regarded this budget as a test of the government’s political sanity). Gideon is being hauled over the coals in almost all the press over the epic 50% to 45% “giveaway” that isn’t. Now I have a feory. I don’t think Gideon is that smart. Anyone who has even vaguely followed British politics over roughly my lifetime (and probably before) must realise a terrible truth about how people perceive tax. And it is this simple. If you say “tax” to almost anyone their first reaction is to think income tax. It’s the headline grabber. It’s silly but that’s it. And a tax (by which I mean income tax - of course - people tend to ignore all the other forms) cut for the rich provokes ire. Gideon should have known this. Even if he isn’t the sharpest pencil in the tin you at least expect someone who rose to his exalted status to display low animal cunning. I think they politely call that “political ability”.
If I were chancellor I’d be sore tempted to scrap the fiction of NI in order to simplify the system and reduce bureaucracy. Let’s say I did that and left everything else the same but raised income tax to compensate in what would analytically be a neutral budget there would still be weeping, wailing, gnashing of teeth and rending of garments throughout the land because the “headline rate” (why do you think it gets called that) of “tax” as perceived by way too many people would of course have gone up quite a lot.
Or it’s like the VAT hike from 17.5% to 20%. That really hit everyone but there was only mild grumbling. I don’t recall even the greatest champions of progressive taxation bitchin’ and pukin’ over what was essentially an increase in a flat tax in the sense that the duke and the dustman pay the same rate. I hazard a guess that if shops and restaurants displayed prices ex-VAT (as they do with sales taxes in the USA) people would have noticed more. I only really think of it when buying computer kit because my usual supplier quotes prices ex-VAT them dealing with trade and all.
Anyway, it’s all OK because the Duchess of Cambridge borrowed a frock from her mother. Now I leave as an exercise for the reader to work out how many daughters for how many years will have to borrow dresses from their mother (rather than buy a new one from say Monsoon) to pay for such fluorescent idiocy as HS2. Of course if you work in clothing retail you’re going to have to retrain (boom, boom!) as an engine driver but I’m sure Gideon has a magic money tree (a Fiscus fantasia I am led to believe) down Threadneedle Street to pay for that.
PS I have done my back of an envelope calculation earlier on HS2 here.