Gordon Brown delivered what was likely to be his final budget yesterday and the People's Republic remains unimpressed. The consensus is that the headline 2p income tax cut actually means the poorer are paying more tax due to the abolition of the 10p rate. PragueTory claims anyone earning less than £17935 more than £5000 is actually paying more tax (not taking into account any tax credits). Not like the Tories to give a damn about the poor, and not like me to agree with them. Circumstance makes strange bedfellows.
This time last week HP stopped producing its sauce in Aston, Birmingham and moved production to the Netherlands where corporation tax has recently been cut to 25.5%. In what can only be described as shutting the door after the horse has bolted, Brown cut corporation tax to 28p yesterday, making up the shortfall by tightening up the rules and raising taxes on small business. We are still quite a way off Ireland's corporation tax rate of 12.5%.
Oh and tax goes up on beer by 1p a pint on Sunday.
Better tank up before then...
Subscribe to:
Post Comments (Atom)
5 comments:
Hi Louis, Sometimes politics throws up odd coalitions. If you think it is wrong that minimum wage workers are paying payroll tax we can agree. I am sure we can still disagree on a host of other things if that helps.
Not only do I agree that minimum wage workers are wrongly paying income tax, I believe that personal allowances should be raised to a minimum of £10,000 before tax without significantly affecting benefits. However, unlike most Tories, I believe that relative poverty is a real problem and applaud Gordon Brown's attempts to reduce it. Unfortunately, the tax credit system is just far too complicated.
It could be worse. In the US, everyone pays Social Security tax (like National Insurance) but its capped for the highest earners.
Presumably, if you raised the tax free allowance, you'd also need to raise the basic and/or higher rate of tax to compensate?
Not necessarily, cutting the right taxes can actually increase revenue when the disincentive is reduced. In any case, at this level of personal allowance the benefit bill could be reduced in both size and complexity meaning a better deal for taxpayers generally. As PragueTory often notes on his blog, what is the point of taking money away from the poor just to give it them back with conditions later?
Thanks for the link which I have reciprocated. The point of taking money to give it back is that you create a dependent (Labour-voting?) class. Also due to variable uptake of benefits, you can look more generous in theory than in practice.
Post a Comment