I just had another thought about the Budget a few days before it is announced.
The dropping of thr 50p tax rate has been so extensively leaked, perhaps it won't happen at all. That way it will appear as if Osborne is making the wealthy pay their share when he actually is doing nothing.
Just a thought
Saturday 17 March 2012
Budget thoughts
It is just possible that the upcoming Budget will be a pivotal moment in the life of the coalition. Of course it may be a non-event, but the signs are that key decisions are going to be made. These could involve significant shifts in the distribution of income in the UK.
We already understand that the Chancellor wants to introduce regional wage differentials in the public sector. This is potentially explosive, divisive and also significant in terms of the public expenditure bill. I was taken straight back to the seventies when I heard the leaks, to the days when national colective bargaining was one of the key issues for the labour movement. It would be either brave or foolhardy, depending on your point of view.
Then we have the 50p tax rate. If this goes and the quid pro quo looks like a fudge it will be another nail in the Lib Dem coffin which is already halfway into the grave. It matters little that economists may predict that a 45p rate will result in more total tax being raised. Any reduction in the tax burden on the very rich will be greeted with dismay among the majority. It is difficult to predict what measures the Chancellor will take to offset such a reduction, especially as a mansion tax is a non-starter (Quite right - almost impossible to administer and unfair for many). They will have to be very precise to avoid charges of a cop out.
Then we have corporation tax and employers' national insurance contributions. If they fall, there will be a remarkable shift in the tax burden. My guess is he will announce the cancellation of child benefit for households, not individuals, earning above about £45,00o p.a. I don't know how much that saves, but it might pay for everything else.
The whole picture, though, looks like a potential disaster for the Lib Dems and a setback for the Conservatives. If the top rate were to go down to 40p, it might be akin to Brown's 75p pension rise moment.
For once it may be an interesting budget. What price a VAT rise ???? Ah ha. On second thoughts - out of the question if Osborne wants to avoid assassination. It just could be a key moment.
We already understand that the Chancellor wants to introduce regional wage differentials in the public sector. This is potentially explosive, divisive and also significant in terms of the public expenditure bill. I was taken straight back to the seventies when I heard the leaks, to the days when national colective bargaining was one of the key issues for the labour movement. It would be either brave or foolhardy, depending on your point of view.
Then we have the 50p tax rate. If this goes and the quid pro quo looks like a fudge it will be another nail in the Lib Dem coffin which is already halfway into the grave. It matters little that economists may predict that a 45p rate will result in more total tax being raised. Any reduction in the tax burden on the very rich will be greeted with dismay among the majority. It is difficult to predict what measures the Chancellor will take to offset such a reduction, especially as a mansion tax is a non-starter (Quite right - almost impossible to administer and unfair for many). They will have to be very precise to avoid charges of a cop out.
Then we have corporation tax and employers' national insurance contributions. If they fall, there will be a remarkable shift in the tax burden. My guess is he will announce the cancellation of child benefit for households, not individuals, earning above about £45,00o p.a. I don't know how much that saves, but it might pay for everything else.
The whole picture, though, looks like a potential disaster for the Lib Dems and a setback for the Conservatives. If the top rate were to go down to 40p, it might be akin to Brown's 75p pension rise moment.
For once it may be an interesting budget. What price a VAT rise ???? Ah ha. On second thoughts - out of the question if Osborne wants to avoid assassination. It just could be a key moment.
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