Osborne’s Big Day
Well now we know. This Blog will not dissect the budget as there are so many expert commentators doing this that the market approaches saturation. Some quick points.
What I liked
The increase in capital gains for higher rate taxpayers
The raising of the tax threshold for the low paid
The increase in VAT
The phasing out of tax credits for those earning over £40,000
The start on benefit reform to reduce the bill
The freeze on public sector pay
The setting out that government departments will face an average 25% cut in the spending review
The concessions to business and industry designed to encourage growth
The aim to re-balance the economy with more emphasis on manufacturing and renewal, saving and investment
The reduction in the scope of the State
What I did not like
The Bank Levy is too small in scope to yield much benefit or impact proprietary trading
Freezing child benefit hits the poorest hardest and still pays those who do not need it. It should have been dealt with like tax credits, but remained linked to CPI.
The State Retirement Pension still goes to many who do not need it. Likewise it should have phased out from £40,000 total retirement income.
Point of Interest
It is wrong to assert that a VAT rise hits the poorest. This is because those on low incomes pay out almost all their earnings or pension on essential living costs, most of which are VAT free. What hurts most is income tax. By raising the threshold by £1000 this can put an extra £200 in the pocket of a single person. Very little of that will be clawed back in VAT.Even if all this extra cash went on VAT rated items the increase would only amount to £5, so the least well of really do benefit from less income tax. The lower middle and middle incomes will feel it most but the high incomes who spend will pay the most.
Thanks for sharing that link… but alas it seems to be down? Anybody have a mirror?