Tuesday, 23 March 2010

The Big Tax Budget

Tomorrow, Alistair Darling will deliver his third and final budget for the country (whoever wins the election, Darling will no be Chancellor after the election).

Tonight, the Telegraph carries some headline plans we can expect from the Chancellor tomorrow. With no plans to raise direct income tax for the many just 6 weeks before an election, Labour will instead opt to take £40 out the pockets of nearly every worker in this country by freezing tax bands.


For anyone earning over the current £6,475 tax allowance (so anyone working 25+ hour week on minimum wage), the freeze will cost £40, by preventing the tax allowance rising with inflation to £6,669. (It may also cost an additional £20 if the freeze applies to National Insurance rates as well).

Some of what the Telegraph expects:
  • Freezing tax bands to raise a £1billion by stealth
  • 5% hike on beer, wine and spirits
  • 3p on petrol and diesel
  • 50p tax rate to start this April
  • Abolition of tax allowance for high earners
  • Freezing inheritance tax allowances, taking an additional £60m from grieving estates

Yet he will fail to tackle the deficit, which is set to cost households £80-a-week in interest alone (£4,320 a year), as the cost of Labour's debt means the UK will be paying more than £106bn in interest a year in 5 years time (more than the NHS budget).

13 years of Labour, many more years of pain.

2 comments:

  1. I could possibly see the arguments of the first two (but would probably end up disagreeing with you); but the last three? Why are we supposed to be outraged that the rich might have to shell out a bit more?

    Surely, no-one can complain that they didn't know that Labour are generally, ideologically speaking, more in favour of making the Rich pay more tax.

    So, one by one: 50p tax rate. Again, an attempt to dress it up as if people earning over the threshold will be taxed a flat 50% rate on all earnings. No, it's only those earnings above the threshold (which is £150,00. Yes, £150,000 - that's going to clobber hard-up familisies isn't it?!): get another argument - oh and hang on, Osborne says that one will stay if the Tories get in too.

    Second: 'abolition of tax allowance' - I'm not even sure what this means. The 'tax allowance' is the thing being frozen: it's the same for everyone and can't be 'removed'. The article refers to 'tax breaks' which is a term so vague it seems bereft of meaning, and, in any event, again only affects people earning over £100,000. It must be a struggle to get by on such a meagre sum, eh?

    Thirdly, inheritance tax. The egregious appeal to emotion here ('grieving estates') is vomit-inducing. It may be a surprise to you that most people's estates are valued at less than £325,000. And again, you omit to mention that IHT is collected only on the value of the estate above the threshold. The Tories want to raise this threshold to £1million: are you suggesting that families dealing with estates valued above £1million are any less 'grieving'. Is the pain taken away by their wealth.

    Illogical nonsense.

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  2. On 50p. It risks killing the economy through a talent drain and a tax on those who create jobs and wealth at all levels. Doesn't just hit high earners. Gives the UK the highest income taxes in the developed world. (in a global economy, we cannot afford that)

    Labour are removing the £6,475 tax allowance for people who earn £100k+ (i.e., people who earn £100k plus will pay 20% income tax, plus 11% NI, on the first £6,475 they earn - somehting currently noone pays any tax on).

    The rest of your essay I have commented on before if you search through.

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