Every little helps

Private jets? What about boats? Ask Mr. Mandelson. I suppose.

Private jet too expensive? Trade it in for a helicopter. Maybe sell it to a shell company and rent it back. Why march when you can fly?

But seriously ... we'll all be so grateful for Gideon's 87p per week give away. He's the man! Just don't mention the VAT hike that'll take it all back again (and more, a lot more).

"tax cut of around £45 - after inflation - per year."

That's it? A whole £45 tax cut? Am I missing something here?

Right direction, but steps still too small!

Some nice changes, looks like the government is trying to make people provide for their own futures. Every little helps I suppose.

Does anyone really think the country can afford tax cuts? We can't expect to carry on with Gordon Brown economics - borrow from your children and grandchildren to keep Labour in power - and the sooner George Osborne budgets for us to pay off Brown's debts, the better for all of us.

This comment was removed because the moderators found it broke the house rules. Explain.

Believe you me, many are struggling to make ends meet daily and living on the margin and that's the middle class squeeze that some of us predicted would happen irrespective of whoever came to power! May the Lord help us all.

Why should somebody who is officially 'in poverty' pay any Income Tax/NI at all?

But they do because the official definition of being 'in poverty' is a household income of less than 60% of the median wage, that is, around £15,000 or so.

Either the official definition of being in poverty is wrong or the aspiration of a tax free income band of £10,000 is woefully inadequate.

Despite this, this blogger is encouraged by a tiny step towards more honest Government, the belated admission that NI is a fraudulent name for another income tax.

Osborne should grasp what Philip Blond (ResPublica) is saying and move in that direction ... for example, by encouraging more co-operatives and mutuals.

I think that political timidity will rule the day though, the sort of ideas that people like Blond come up with take a long time to become established lore.

Families are hurting, real bad.

Every little helps? What about the £2,500 reduction in the kick-in level for 40% tax rate, and the increases in National Insurance? These will wipe out (and more) the increase in personal allowances you mention, for millions of people earning under £42,000 per year. These are not wealthy people, but they will pay for the foolish greed of rich bankers as will the poor. And where is any strategy for growth and job creation? We've all been here before sadly, the majority of decent hard-working people being squeezed to pay for the mistakes of the banking sector. And most depressing of all it is our under 25s who are already paying the highest price in terms of unemployment and despair.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

If he manages to simplify the system, then it'd save billions, and make the system fairer and more transparent.

The logic that Brown created, whereby first you pay more tax than you need to, then you have to beg for some it back via tax-credits, is something that he needs to put straight into the bin.

What should happen is that everyone fills in a form which summarises their situation, and then they either get a bill, or a cheque, depending on how much tax they've already paid and what their situation is.

There is absolutely no need for a separate process/form for submitting a tax return, and submitting a tax credit form, or for having a separate claim for the various benefits; it needs to be a single process/form.

If you had a decent I.T. system to process it, and if you used the right structure, you could probably decimate the costs of everything related to tax-collecting, tax-credits, benefits etc.

We've got 100's of obscure benefits (eg free tv licenses for some people etc) that we need to get rid of; let people keep more of their own money in the first place and let those people decide what they want to spend it on; it's their money, not the government's money.

It needs to be a lot simpler; if someone's income is below a reasonable level for their situation, then you send them a cheque, otherwise you send them a bill for the relevant tax.

Getting rid of national insurance, and readjusting the income tax bands accordingly would be a start. People say "ah, but pensioners don't pay N.I." - in that case, I'd say "you simply adjust the threshold at which they start paying income tax to compansate"

Imagine a world where, regardless of your situation, you only ever have to fill in a single form, and you either get a cheque, or a bill, from the government, and where everybody who pays tax pays the same rate as each other, but at different thresholds depending on their situation. It's possible, and it'd be infinitely fairer than things are today; it's just a case of doing the maths and putting the logic into some new software.

Can't see how merging NI and Income Tax will be anything other than a large hike in taxes for the many people like myself that have taken early retirement.

According to the Dept of Work and Pensions I have already paid the maximum amount of NI required to obtain a full state pension. However at 57 I have another 8 or 9 years to wait before it is paid.

I currently pay Income Tax at 20%. The forecast for the tax rate when NI and Income Tax are combined is around 32% a hike of 60% in the actual amout of Income Tax I pay. Even if the Chancellor raises the Tax threshold for Pensioners it is unlikely to apply to people of 57.

So the real losers will be those of us living modestly of limited means who by retiring early have freed up a job for someone younger.

I am pretty worried about the proposed assistance for first time buyers.

Why?

The Chancellor is helping first time buyers onto the housing ladder, if they buy a new-build.

The deal is the FTB puts in 5%, the government puts in 10% and the constructor puts in 10%, allowing a 25% deposit, and access to some good mortgage deals.

The downside is that it will depress the low end of the general housing market. After all if you had saved up £10k, and had the choice between a £100k pokey victorian mid terrace with a terrible interest rate because of your loan-to-value rating, or a brand new townhouse for the same money with a great interest rate thanks to your government assisted lump sum, which would you go for?

Disclosure: I am currently trying to sell a first time buyer type property, and am worried that this will undermine my chances of doing so.

I spent yesterday being trained to advise people about the changes to Housing Benefit. Without going into the rights and wrongs of the changes, what occurred to me was that the system is not completely thought through. There are so many areas of doubt and aspects that have not been considered. I am deeply concerned that we are heading for a period of chaos which will either lead to unacceptable delays or to a need for MORE staff to sort it all out.

This has come about because when an overall approach was chosen, it's application was more problematic than anticipated. What may have seemed to be acceptable for a millions, may have beem totally unacceptable for a few thousand. This lead to some modifications to the overall approach and so it goes on.

Housing Benefit is a relatively simple benefit which is not being challenged by armies of highly paid solicitors and accountants. Which brings me to the reform of the tax sysyem. It is a mess and it does need reforming, but if it is not done more carefully than the Benefit system the government will leave vast gaps which will expoited by avoidance schemes. A problem like making allowance for a carer who has to regularly stay overnight will pale into insignificance compared with a private yacht being described as a mobile salesroom.

The merging of National Insurance and income tax is a worry for older people particularly pensioners who do not pay national insurance contributions as they are no longer in work.

I'm wondering if this means that as someone retired & dependent on a pension I am now going to have to pay a massive increase in tax to fund someone else's state pension when I am unlikely to qualify for the new proposed £140 pension myself.

If that is going to be the case then the £10,000 personal allowance needs to be brought in now to avoid hardship. Then again it does depend on how the combined NI & Income tax arrangement will operate i.e.the savings will be made from reduced administrative costs and/or will only apply to those under retirement age.

Like many I will watch the budget with great interest, hopefully on my savings!!

The Chancellor has no money to spend in his Budget
------------------------------------------------
Or to be truthful nick, this should read. The chancellor has money to spend, but instead of spending it to help low income earners who are already drowning financially because of rising inflation and his austerity drive and cuts, he is instead writing cheques for
£3million a day for Britain’s part in the offensive against Libya:-

£1.5million for a pair of air-launched Storm Shadow bombs.

£900,000 for each sea-launched Tomahawk. £40,000 for a tornado jet to be in the air for an hour.
And about £2million a week to station Britain’s warships and subs in the Mediterranean.

"The Chancellor has no money to spend in his Budget" ... the budget covers income as well as spending, the decisions are his for the making. If he wanted to raise revenue he could, but he won't. For you to open with this line is to toe the party line, however inadvertent that may have been.

I stopped reading soon after that. Your uncritical eye seems to need replacing.

I bet you Mr O was a budding magician and keen to entertain his school friends at parties, in other words the hand is quicker than the eye. Or if you like the left does not know what the right one is doing! I'd certainly argue that he'd be at least a third rate comedian if he choose this carreer! PS how much is that little police action in Libya costing! So expect another deft of hand movement to re-coup UK coffers...

Any attempt at the simplification to the horribly complex tax system is to be encouraged (and even for me, Gordon Brown needs to shoulder the blame for taking an already complex system in 1997 and making it even more complicated). The key thing will be to do it in the most transparent way to ensure people can see that its a genuine attempt to make people's life simpler (if not better off in the short term) and to reduce the costs of administration, including avoiding errors. The Tories have got Labour's 10% tax debacle as a recent example of how a supposedly well-intentioned change can go drastically wrong.

It surely is not beyond the wit of man to come up with an overall income tax system that doesn't need 2 different taxes plus a series of credits at the lower end (not to mention some crazy adjustments at the upper end) to arrive at the eventual (fair?) answer. Surely simpler would also mean less opportunity for tax avoidance/evasion, although I'm not completely naive to expect it would go away altogether.

However today wont be about fresh new policies and robust opposition challenges - it'll be about economic insults and ya boo playground taunts - and thats before we move from this blog to whatever happens in the Commons.

Now whats the odds this blog will still be open when the chancellor gets to his feet......

Chancellor George Osborne is to increase the personal tax allowance to give 25 million people a cut of around £45 per year.

That comes to just over 12p a day for a family with only one person working, whilst his lunatic policies are stealing hundreds of pounds from the same person's pocket just to line the fat Tory Grandee's kid-skin wallets and swell their bloated bank accounts.

This is the true face of the "compassionate Conservatives."

hip a de do da im going to be 45 pounds better off a year what a dam lie that is between the vat hike and my food bill petrol for car utilaty bills up what the hell do you think i am thick or what im sick of being thought of as stupid and i can tell the idiot osbone the fast majority of people in this country are not

"Or if you like the left does not know what the right one is doing!"

The left has barely had half a clue what it has been doing itself, let alone the right, for the last twenty years. They've spent most of the last year denying it.

23#

Still a class warrior into your advanced years. Are you Bob Crowe in disguise? Or Len McCluskey?

Much ado about nothing methinks. 5.5% inflation, job and benefit losses are the real issues and these will not be tackled by our own Mr Micawber.

I wish people would realise that because there are so many people earning money and paying taxes the effect of any change in allowances is tremendous.

This 'pathetic' increase of £45 a year will cost the Government about £1 billion in revenue. Just like that.

You've got to laugh at what lord snooty and bertie wooster think is a significant boost to underclasses.

These boys are just completely out of touch with the lives of normal people.

£45 ?? Wow I'd forgot what I'd be doing with my generous £45 in the next year. Take myself to the Bahamas perhaps.

OOPS! Fiasco of the day.

Public borrowing for February 2011 compared with same time last year is UP!

We have a single issue party running the disunited kingdom. Any level of destruction is acceptable in seeking their goal to collapse the public sector and reduce borrowing.

Yet now we learn that even on that single issue they are failing.


(OK - this came out yesterday, but I already had one fiasco of the day.)

"I understand that he will increase the personal tax allowance again in order to give 25 million tax payers an income tax cut of around £45 - after inflation - per year.

The amount of income anyone can earn before paying tax will be increased by around £600 from April 2012 but, unlike last year, taxpayers on both the 20% and 40% tax rates will benefit - ie anyone earning up to £115,000 per year."

Did someone tell you that Nick? Did you give it any critical examination?

A £600 increase in allowances = £120 less tax, so could you show how you get from £120 to £45?

A "40% tax payer" can earn up to £150k, so it's wrong to say that "40% taxpayers" will benefit from the increase in allowances. Some will, some won't. The point is that IF you get a PA you'll benefit and PAs are withdrawn above £100K salary, which is why you refer to £115k as the cut off for benefiting from an increase in PAs. Except, of course if the PA increases by another £600, the PA will be around £8k and you will benefit from the increase up to around £116k, not £115k.

If you must talk about tax, Nick, you need to be more accurate. God knows, I spend enough time on here pointing out other's misapprehensions without you adding to them.

"29. At 08:40am on 23rd Mar 2011, theboyz wrote:
£45 ?? Wow I'd forgot what I'd be doing with my generous £45 in the next year. Take myself to the Bahamas perhaps."



If you want to be better off next year, how about relying on yourself to earn more rather than the Government to take less?

@Thoughful
Families are hurting, real bad.

That's awful. Who is this Real Bad, and why are families picking on him?

he could get back the money loaned to the banks as they are making profits enough to pay big bonuses they can oay back whatb they owe us ,then the fuel tax could be cut to make m life a bit easier for all ,with price reductions ,hat is unless the bigsuper store don`t get greedy and tale the lot

#22 Ginge,

I'm with you on this one - tax is way way too complicated at the moment, people perceive it to be unfair because they don't understand all the separate taxes and contributions etc

Much better to provide a simple flat system that anyone can understand, avoidance would not completely disappear but I bet if the system were simpler and fairer people wouldn't bother trying as it wouldn't be worth it

You want to see the schemes folk get up to here in the Netherlands!

As you say - surely it is not beyond the wit of man....

So the axe man is giving us £45 a year extra. What a joke when he's reduced the level of which you start paying 40% tax to 35k. And he expects us to thank him and look at him all sweetness and light? What a muppet!!

Yes it’ll be quite interesting to see and hear George Osborne presenting his budget this afternoon. Big day for him. He won’t have been pleased that David Cameron, William Hague and Liam Fox have been hogging the limelight (courtesy of Libya) over the last week or so and this is a chance for him to get back to where he believes he ought to be - centre stage. If the notorious ‘Bully’ snap shows anything, it shows a young man who has no intention of a life spent playing maracas. No, it’s lead singer or it’s nothing for Osborne. So regardless of the actual measures he’ll be announcing ... none of which, needless to say, will be remotely related to improving our economic prospects ... expect him to carpe diem and to seize the day. Or at least try to. He'll have been practising for ages, I think it's safe to say, but the problem with this is you can overdo it and leave yourself jaded. We'll soon find out (won't we?) and it will be - like I say - quite interesting.

22 - "It surely is not beyond the wit of man to come up with an overall income tax system that doesn't need 2 different taxes plus a series of credits at the lower end (not to mention some crazy adjustments at the upper end) to arrive at the eventual (fair?) answer."

Absolutley. NIC scrapped, PAs upped to £12k, one flat rate income tax rate of 30%.

CGT 10% on business assets, 20% on non business assets, no seperate CGT exemption. CGT extended to non-residents.

IHT 10%, nil rate band £100k

VAT 20%

Too many other tweaks to mention but those are the ones that affect most people. All costed & would bring in as much if not more than now, especially as tax avoidance schemes would hardly be worth doing.

Why no comment on Osborne’s 12% increase in tax on pensioners by incorporating NI into the basic rate on tax?

The Bulligdon Boys still tearing the workers a new one I see.................!!!!

................what about a tax on 'Bankers' bonus's!!!
Time this scum were made to PAY!!!

Tax cut of £45 hmmm.

Well let's compare that with an average increase in VAT of roughly £100-120 per household (based on an average annual expenditure of £5,200). We also shouldn't forget price inflation of 5% (roughly an additional £250 on household prices per annum). And this is happening in an environment where there is little wage growth and no interest on savings.

Effectively, the man has taken a £1 off every person in the country in the last year and given them 5p as compensation. It wouldn't be so bad if he was actually sorting the deficit, but he is now also dangerously close to failing even that task, a fact which won't be discussed widely today. £5bn under his borrowing target will be lorded instead. However, against a rapidly increasing unemployment bill in the new financial year, inflationary pressures on government expenditure and a likely slow down in tax revenues following interest rate rises that he has expediated, I wouldn't be expecting to see surpluses in the pre-Budget report in November.

15 - "According to the Dept of Work and Pensions I have already paid the maximum amount of NI required to obtain a full state pension. However at 57 I have another 8 or 9 years to wait before it is paid.

I currently pay Income Tax at 20%. The forecast for the tax rate when NI and Income Tax are combined is around 32% a hike of 60% in the actual amout of Income Tax I pay."


So what's changed? As a 57 year old you are still paying NIC anyway, so you are already paying 31% combined & 32% after April 5. Just because you've already amassed maximum NIC contributions for pension purposes, you're not exempt from NIC. You're making a fuss about nothing.

Yay - a whole £45 - seriously stop with the "good news" component of the budget, while the tax free allowance is increasing by a pittance, national insurance is also going up which will eradicate any real gain.

Maybe Osbourne should hire himself out for children's parties because I conclude that these are the only people who would be fooled by his crass attempt at prestidigitation.

Forget about the squeezed middle, it's now the squeezed 90 % of the population who didn't go to eaton, harrow, or some other such establishment, and who don't see the general populous as a cash cow to be bled dry.

Funny how when "there is no money" and cuts are needed, fountains of the stuff can be found to fund a neo-con, regime change motivated endeavour - remind me how much a cruise missile costs again.

I wonder if George Osborne lives in the real world. How does he think that the rise of £45 per year is going to get the ordinary working folk out of the massive hole he and his super rich cohorts have created.

It is becoming a case of I'm all right jack'and to hell with the public. They should in all of this remember they were not elected by a massive majority and in the not to distant elections will I'm sure give them their first taste of exactly what the electorate think.

Inflation is at it's highest for over 2 years but there will be absolutely nothing in the budget to aleviate this. How much further will this Goverment go before they realise the damage they are doing and will do with their short sighted policies and their bid for a place in history.

"36. At 08:54am on 23rd Mar 2011, theboyz wrote:
So the axe man is giving us £45 a year extra. What a joke when he's reduced the level of which you start paying 40% tax to 35k. And he expects us to thank him and look at him all sweetness and light? What a muppet!!"

If the definition of 'muppet' is somone who hasn't understood what they've been told, that's you.

OK, the "£45" Is NEXT year, not this (and I still don't know where £45 comes from. Nick?).

THIS year (i.e. from April 6) PAs go up by £1,000 but the 20% band is reduced to £35k. This does NOT mean that you pay 40% above £35k. That's the 20% BAND. IF you qualify for a full PA, you'll pay 40% tax above (7,475 + 35,000) = £42,475.

The point is that if you are a 20% taxpayer you WILL be better off and if you're a 40% taxpayer you won't be.

In the current climate, I've not got a problem with tax cuts aimed at the lower paid. Have you?

fubar S @ 25

I'm moved to point out - gently for now - the irony in you castigating as a 'class warrior' anybody who voices the opinion that the Tories deliberately run the country for the benefit of the rich, when you yourself hold the (far more ridiculous and cartoon-like) view that Labour deliberately hold down the working class, lock them into poverty and low aspiration, so as to keep their vote.

I think the coalition is doing a good job, better than the Tories would have done on their own and about a thousand times better than the previous government. If they can simplify tax, benefits and the administration they will remake this country in a new way that will benefit us all. Labour should be going along these lines rather than going further to the left, they're going to be left out in the cold when the country recovers and we're all happier.

"taxpayers on both the 20% and 40% tax rates will benefit - ie anyone earning up to £115,000 per year"

Surely not? How could this possibly be true? How could anyone earning £114,000 be able to benefit in this current climate?

Osborne seems to have quickly backed down on raising APD, he should go much further and reduce the ridiculous amount currently charged.

#37 sagamix.

I haven't picked up this supposed desire for power that you imply, are you trying to make a parallel with Gordo and Tony?
Everything i've heard in newspapers and radio has said that GO is happy to be in the shadows, doesn't want the limelight but has excellent links to all members of the government. As much as i'd like to deride him for being a bullingdon boy and an upper-class toff, he doesn't give me that impression so i'm happy to give him the benefit of the doubt. In the same way that I didn't judge GB for being a dour, self-righteous preacher because he's a son of the manse. I judged him on the poor job that he did of running the country when he was PM.

There is a level of complacency from BBC commentators about the possible merging of tax and national insurance. It would not be, as you imply, merely an administrative tidying up of the system. Currently at retirement age you stop paying national insurance but are still liable for tax.The proposal would make millions of pensioners worse off.

40. At 09:02am on 23rd Mar 2011, Everythings Gone Green wrote:
The Bulligdon Boys still tearing the workers a new one I see.................!!!!

................what about a tax on 'Bankers' bonus's!!!
Time this scum were made to PAY!!!"

What. ALL bankers? Even cashiers down the local branch?

Besides, I think you'll find that there IS a tax on Bankers' bonuses. It's called "income tax". Frightfully high too. 50%, 51% if you include NIC, soon to be 52%.

Blamegame @ previous thread wrote:

"White feathers all round."

>>

Reminds me of that Jimmy Carr gag: "You can say what you like about pacifists ...".

Nautonier has a tendency to lash out when disagreed with, I've discovered. Accused me once of being a "job stealing immigrant" - which isn't a million miles from the truth, but I suspect it didn't come from a good place.

Going to be in your element today, Andy, aren't you? (although not as much as Osborne, obviously). Which is good and you won't find me getting in your way. Your post 38, for example, I can give to tick to some of that. Just a couple of points are maybe worth raising at this stage:

VAT @ 20%. No, too high. Unless we scale it based on the income/wealth position of the person purchasing (as I floated a few days ago) its regressive qualities mean that 10% is the optimum level - but let's just get back to 15% for now and stick with this until we've turned a fiscal corner.

10% is way too low for IHT. I'd go with 50% but I'd have a nil band of £500k (much higher than your £100k). First half mill is all yours, then after that it's half for you and half for us. Cheers and beers and thanks for living.

Flat rate tax @ 30%. Yes, agreed, I like this a lot. But only for an income band £20k to £40k. Other flat rates then as below:

0 to 12k - Nil (per you).
12k to 20k - 15%.
20k to 40k - 30% (per you).
40k to 75k - 40%.
75k to 250k - 50%.
over 250k - 65%.

This being with NI having been (per you) scrapped.

#38 Andy

Yup to all of those, like you say - needs a few tweaks but nice and simple

......cue Saga and 'MaxiTax' !!

Andy @ 32 wrote:
If you want to be better off next year, how about relying on yourself to earn more rather than the Government to take less?

>>

Yes, tax rises can be an incentive to work harder. Slightly surprised to see you making this point though. New leaf?

"48. At 09:20am on 23rd Mar 2011, RedandYellowandGreennotBlue wrote:
"taxpayers on both the 20% and 40% tax rates will benefit - ie anyone earning up to £115,000 per year"

Surely not? How could this possibly be true? How could anyone earning £114,000 be able to benefit in this current climate?"

Just to sooth your ire, people in the 'current' climate won't benefit. The changes being talked about by Nick will only come into effect after April 5 2012.

I blame Gordon Brown, he started this "tell them about it before, tell them about it at the time, remind them about it later" method of announcing tax changes.

Disapointed that Osborne has seen fit to continue the trend. As can be seen from on here, this gets terribly complicated.

AndyC555 @42
i think the poster who is talking about his effective tax rate going up from 20% to 32% is not in employment - they have taken early retirement.

What this means is that they still pay income tax, but not national insurance. If the two are combined, a pensioner will now pay a higher rate of tax than they would have done before.

46. sagamix

fubar S @ 25
"I'm moved to point out - gently for now - the irony in you castigating as a 'class warrior' anybody who voices the opinion that the Tories deliberately run the country for the benefit of the rich, when you yourself hold the (far more ridiculous and cartoon-like) view that Labour deliberately hold down the working class, lock them into poverty and low aspiration, so as to keep their vote."

I was about to post something similar on a previous blog when the shutters came down. I refer to the poster's frequent and derisory use of words like 'underclass' being one example of double standards.
Fubar, that's a no-fly zone for you.

"Long term, however, it will be the extent to which he embraces tax reform - sweeping away tax reliefs and merging income tax and national insurance - which will define him and this budget. "

==============================

This is clearly the key part, think over the argumentations used by many when discussing healthcare, state pensions, social care etc etc. How many simplistic argumentations start with pointing at having paid for this "insurance" against the vagaries of a capitalist system based life (healthcare, benefits, social care, pension).

If there is no National Insurance (irrespective of the actual dispersal of funds and splits of what is paid in or out currently - and that NI has never been a real insurance in the purely financial term) then where do the debates on long term entitlements built up from paying "insurance" start? Well they don't , do they, it simply becomes a discussion about current finances - a smart small state political strategy.

Then if NI ceases to exist as a separate entity then how to deal with Employers NI contributions - the nominal costs paid out to support healthcare , social costs of business activities etc.

Well obviously you have a very difficult case to pursue on this - why is a company being forced to pay "insurance" nominally for state services provided to employees which the employee is not (as they now only pay tax irrespective of rate). Why should a company not be free to choose how to "insure" their employees ?

Follow the consequences of this seemingly simple proposal and you end up with a completely different country to the one we now live in, for good or ill. It would be a very fundamental change with very many consequences - many which I am sure are understood and the reasoning for the plan, but will never be spoken about in justifying it.

"49. At 09:23am on 23rd Mar 2011, Peter White wrote:
#37 sagamix.

I haven't picked up this supposed desire for power that you imply, are you trying to make a parallel with Gordo and Tony?
Everything i've heard in newspapers and radio has said that GO is happy to be in the shadows, doesn't want the limelight but has excellent links to all members of the government."


You'll have to get used to Saga, he does like to run his little fantasy story lines. He started his 'Osborne is conspiring for the top job' line as soon as the election was over last May. That was at the same time as he started his "I give the coalition 16 months at the most" line.

Saga's harmless as long as he's not allowed anything with sharp edges.

#25 Fubar_Saunders Picked up on the lateral and dual swipe....for your next trick do you read minds? You were refering to #21 not #23.................

Government offers Mortgage help for first time buyers?
Not come accross any mortgage providers offering 95% deals for 1st time buyers. Barely any offering 90%. Found one for my daughter but conditions excluded 'new builds' and 'apparments' for wich max loan to value was 85%. Then all want large 'product fees'. No surprise then that the market is completely flat. No need for Government help if Mortgage providers served the market properly.

peter white @ 49

Fair(ish) comment and I do fully accept that not everyone picks up what I do about George Osborne. Is it because their antennae aren't quite so highly developed? Possibly. In any case, I think I'm right. These 'rasputin' types are only content to lurk in the shadows for so long. There comes a time (and for Osborne, I sense it's now) when they thrust themselves forward, looking for applause. Let's just see who grabs the microphone - as it were - and takes the Coalition lead in the budget debate later today, shall we?

jon112dk and sagamix...


as the left are so fond of trumpeting their intellectual and moral superiority perhaps you would like to comment on these remarks made by a Harvard professor. Not least because, as the left likes to point out so frequently, the shadow chancellor, Ed Balls, not only had the good fortune to be privately educated but then went on to Oxford and Harvard. So, well done thus far, Mr Balls.

We all know Mr Balls default setting, 'spend more money' by now. We also all know its roots in the Keynsian apologia the labour party offers. However, we have never had an acknowledgement of the knock on negative effects of 'crowding out' of private sector investment. Indeed, on these posts we have even had flat rebuttals that these effects exist at all.

So we turn to a study by Alberto Alesina of the Harvard University who demonstrated that these effects do exist. Not only do they exist, but they get worse as time goes by. Mr Alesina demonstrates in a study of fiscal consolidations every one percent increase in public spending as a percentage of GDP lead to a decrease in business investment by 0.48% after one year and a cumulative 2.56% over five years.

This suggests that, contrary to Ed Balls rather noisy recommendations of more public spending, not only would this make matters worse in the private sector but the evidence points towards the polar opposite economic policy being more effective in the long term by his old alma mater...

So who's right and who's wrong? Only time will tell, but the 'dangerous experiment' suggestions of Mr Miliband and Mr Balls appear to be sentiments backed by a dwindling number of admirers, including from an alumni of Harvard University itself...

Are the left in this debate anymore or just ranting from the sidelines?

It's grim up north London (where even the quality of the debate has gone down)...

The scrapping of the 1p fuel tax rise is a HUGE CON. in the past 6 months fuel prices per litre have gone up by at least 10-15p.

60% of that rise goes to the government. So 6-9p of the fuel price rise per litre is down to Georgie Boy. So the 1p scrapping is nothing in the scheme of things.

Wake up people!

mightyc @35, Gingerf @22
Simplifying the tax system may well be a good move and may also be the most important announcement in a generally rather low key affair. Such a move could open up a route to dealing with the 'hidden' part of the benefit system, aka the notorious and equally complex 'allowances' system which cloaks the true amount of tax paid across the income range.
As with benefits reform this will be no easy fix, could have cost implications and involves a significant element of risk (getting it wrong) that will require a flexibility over an extended period of time to adjust and refine. It won't readily fit into a 5 year (between elections) timeframe and carries political risk which has tended to dissuade interference. Not to mention the opposition from those for whom the opaqueness of the current arrangements is preferable.

More hearsay, where are the facts Nick.

51. At 09:34am on 23rd Mar 2011, AndyC555 wrote:
40. At 09:02am on 23rd Mar 2011, Everythings Gone Green wrote:
The Bulligdon Boys still tearing the workers a new one I see.................!!!!

................what about a tax on 'Bankers' bonus's!!!
Time this scum were made to PAY!!!"
==================================


Besides, I think you'll find that there IS a tax on Bankers' bonuses. It's called "income tax". Frightfully high too. 50%, 51% if you include NIC, soon to be 52%.

.
.
.
.
"frightfully high"


...............you ARE having a laugh, are'nt you? Whats the income tax paid by these lowlife really, after loopholes & tax scams, be very suprised if any are paying 5+ % on their bonuses'!!!!

...........why, we keep being told these fraudsters will leave due to the "frightfully high"
tax conditions in this country!!!
So I doubt their tax dollars ratio is anything to shout about!!!

At 00:21am on 23rd Mar 2011, JohnConstable wrote:
Why should somebody who is officially 'in poverty' pay any Income Tax/NI at all?

But they do because the official definition of being 'in poverty' is a household income of less than 60% of the median wage, that is, around £15,000 or so.

Either the official definition of being in poverty is wrong or the aspiration of a tax free income band of £10,000 is woefully inadequate.

==================================

This is a very good point.

I think the answer is something along the following lines:

Poverty is worked on "household" income and tax is paid on individual income. If (and I have no idea of the statistics) the vast majority of households have two income earners then tax should kick in only at roughly half the poverty line.

I believe that the median household income is just under £30,000 so that means the poverty line is household income of £18,000 which based on paragraph above means income tax should start at about £9000.

Of course this concept breaks down for those households with only one earner as it means income tax is kicking in too early - but I guess govt would respond that the benefit system will deal with this.

Personally I think the poverty calculation is completely wrong. I know the method of calculation is very common and I am happy to accept that poverty is not just absolute but also has a relative component because rich countries view things as essential which very poor countries would view as unattainable and unnecessary luxuries. But even taking that into account the definition of poverty is absurd. How can you give any credence to a definition which would allow govts to meet poverty reduction targets simply by deporting say the 50,000 richest people in the country - after all more people than that leave on holiday every day in the high season. Also the poverty calculation is on a national basis. £10,000 a year is totally inadequate in London, but is that true to the same extent in Cumbria or northern Scotland?

We need a better definition of poverty and we need it to vary region by region. I suspect in most areas of the country the poverty dividing line is lower than the current definition but in London and parts of the SE it would need to be higher, possibly quite a lot higher.


One other point on Nick's blog. The concept that squeezing tax avoidance will generate extra income is laughable. Tax avoidance is like a balloon, squeeze one end and the other expands. Tax avoidance is possible because of the complexity of our tax system. Our tax system is complex because politicians and HM Treasury are incapable of resisting the temptation to meddle and reward special interests. Add in a rather quaint attachment to the idea that "progressive" tax requires not merely that rich people pay more tax (which they do in any case) but that they pay more as a percentage of income and what you end up with is a tax system running in 5 volumes and over 10,000 pages of very small text.

If you want to eliminate tax avoidance then politicians have to grasp two points which so far (ie over the last 100 years) they will not listen to:

1. Taxes have to be low enough that no one can be bothered to avoid

2. Taxes have to be very very simple so it is too difficult to avoid

Personally I would go with a flat tax on income at 30% on anything over £10,000. Does not matter whether income or capital gains and the only exceptions would be (a) gifts to charities (b) pension contributions (because we need people to provide for their own old age).

#59 Neil

I think that the use of NI has long since gone - years ago it used to cover the costs of healthcare and all the things you mention. It has long since fallen way short of being able to do that and income tax and all the other taxes now go into one big pot to pay for everything, it isn't used any more as an insurance - it's just another tax

Get rid of it and bundle it into income tax - it is another tax, it is not used as an insurance any more

If tax and NI are merged, what about pensioners? They pay income tax but not NI. I can't see Gideon adding 12% to pensioners' tax bills, since well-off pensioners get his party into power and keep it there. So you'd need some complicated rebate.

MC @ 54

"cue Saga and 'MaxiTax' !!"

Indeed, and it's now there for you @ 53, Chewster.

Point of clarification, though: the 'MaxiTax' regime seeks only to set rates which will optimise (max out) the revenue to the Exchequer, it's not about soaking people. For example, a top rate income tax of higher than 65% on amounts over £250k (that's with NI having been ditched, remember) would take us into diminishing returns territory* - avoidance, emigration, drowning stools, all the reprehensible but nevertheless real Andy stuff - meaning total revenue would fall if we went there. So we don't. It's not about punishing people for being successful, it's about efficient and effective (and compulsory) fundraising for good causes.

* Laughing Curve.

50 writerliz

There is a level of complacency from BBC commentators about the possible merging of tax and national insurance. It would not be, as you imply, merely an administrative tidying up of the system. Currently at retirement age you stop paying national insurance but are still liable for tax.The proposal would make millions of pensioners worse off.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Politically dangerous for sure as older people are more likely to vote than the young and the baby-boomers (as a group) who are retiring / retired now seem to have a sense of entitlement that knows no bounds. When they were working they voted for low taxes for workers and didn't seem overly concerned by 'low' pensions for the retired, now they are retiring they want more generous pensions and higher taxes on workers who they expect to work for far longer than they did.

As a generation, they have contributed less to the state than they will receive from it and benefitted from the credit fuelled boom in house prices, whereas the reverse will be true for those entering the workforce now. Young people can't afford to buy houses and will have to pay more taxes for smaller benefits.

Of course there will be individuals in both groups who do not fit this profile. Poor and older pensioners could be protected by increasing their personal allowance further.

Overall though, difficult to argue that the young are not shouldering more than their fair share of the burden already.

#56 AndyC555

Thanks, I did realise that the changes would come into effect in 2012, but I'm afraid I'm a bit pessimistic when it comes to recovery under this current gov. I've a feeling that come April 2012 the economy won't have improved to the point where earnings anywhere near £114,000 are common.

Taxing private jet passengers is a disgrace. I would join the protest on Saturday, but what with jet fuel being so pricey, it makes more sense to stay offshore and count my bonus. At least Georgie isn't going to touch that.

Nobody likes to see 'crowding out', Robin (64), it's rude, but you're fretting about the wrong sort (of it). What you ought to be thinking critically about isn't to what extent the public sector crowds out the private sector - it doesn't, it just does a better job of many things - it's how the banking, financial services and property sectors have, since the 1980s, been crowding out the more real-value-added activities which we could have been engaged in. This is the crux of the matter and it isn't (you'll be mortified to learn) particularly a left v right debating point, it's more by way of a fact.

50. At 09:27am on 23rd Mar 2011, writerliz wrote:
There is a level of complacency from BBC commentators about the possible merging of tax and national insurance. It would not be, as you imply, merely an administrative tidying up of the system. Currently at retirement age you stop paying national insurance but are still liable for tax.The proposal would make millions of pensioners worse off.

===========================

So, you also have a significantly higher personal allowance compared to those who work, have access to a raft of benefits and allowances which everyone else has to pay for (free prescriptions, bus passes etc. etc.).

The consequences of the prior generations voting patterns and actions have reduced this country to where it is, why should pensioners alone as a group be protected from the consequences of the current governments actions? They after all have lived longer and contributed more to the current position the nation is in compared those who are just starting out in life - and where the costs at present are most readily apparent.

It is demographically more likely that pensioners have voted for it as there is a higher turnout in older age groups and they are more likely to vote Conservative.

However I would be very sure that also for this very reason that the reason it is not mentioned or considered is that it is assumed that any change will be neutralised for the vast majority of pensioners by the way it is implemented.

The so called grey vote is important politically and no chancellor will risk such a huge political problem in a core voter group as suddenly massively increasing their taxation - irrespective of how unfair they have to be to everyone else to pay for it.
So I wouldn't get in a tissy over it - it is extremely unlikely to work out as you suggest.

"How could this possibly be true? How could anyone earning £114,000 be able to benefit in this current climate?"
As they are earning more than 4 times the average salary(5 times the median), they are benefiting already.
Worry about those working full-time and earning less than £15k than those at the upper end of the income scale.
Osborneconomics will do nothing for them.

Whistling Neil @59
Thoughtful contribution, Neil, and it needed saying. Would be a mistake to see this (proposed tax reforms) as a case of 'not looking a gift horse in the mouth' when we should be calculating the odds that it's a 'Trojan' horse. What if the nags bloodline leads straight to a sire named Small State Ideology?
Recalculating.

In roman times decimation meant losing 10% of the army unit in a gruesome way - killed by their comrades.

This government (from MPs down to lowly clerks) needs to be cut by 50%, (preferably in an un-gruesome way) - what do you call that?

There are so many things it does inefficiently or doesn't need to do at all. The government should be here to serve us, we are not here to service the government.

There should be a law to stop the government borrowing, as it's the borrowing that means we are all paying huge amounts of interest on previous (and current) wasted spending by the government. If a government cannot reduce its tax take and live within that tax take, then it should move over for one that can. You wouldn't employ a tradesman on an open-priced contract. You would want to know what he is going to do and what it will cost. Why not the government?

76 saga

What you ought to be thinking critically about isn't to what extent the public sector crowds out the private sector - it doesn't, it just does a better job of many things - it's how the banking, financial services and property sectors have, since the 1980s, been crowding out the more real-value-added activities which we could have been engaged in.

>>>>>>>>>>>>>>>>>>>>>>>>>>>

If you want to see what happens when the private sector is crowded out, look at old industrial areas of the UK. As an example, the public sector is the dominant employer and pays wages that have often been agreed nationally and are above a natural market rate in a depressed area. One of the advantages that a private business should have in such an area, cheaper labour, is removed. Is this more or less likely to encourage local private sector growth?

sagamix...

I thought you were representing the 'intelligentsia'.. but that is the mist unintelligible remark all day...

It's grim upo north London...

Exactly how will Osborne ensure that people like myself who have retired DO NOT pay NI.

worked all my adult life and have paid my dues in full but will have to wait until I'm 67 to get my State Pension. I don't see why I and many others should pay for the high earners or the don't work won't work members of our society through the back door.

Mr Osborne really needs some lessons in basic arithmetic and common sense.

Can't wait for the Chancellor's hair to go grey overnight - but then that's unlikely as you have to be personally affected by financial worries, amongst others, for that to happen. Also, you need a brain too and some sense of empathy? Have I said too much - gone too far? No names mentioned - so let's hope the mods don't mind?

rockRobin7 @64
Just caught your post. Super effort! We're going to have to stop dismissing your rants if you start to introducing evidence from academics at Harvard.
One minor point. Could you give a suitable link so others can examine your source?
One major point. The conclusion you draw from your evidence doesn't seem justified on the basis of your description of it. Viz. the discussion is around the degree of spending cuts necessary not whether spending should be increased above 2009/10 levels. In this context it's not clear without further information about this research whether it is relevant at all.
Still Rome wasn't built in a day! Go robin!

70. At 10:06am on 23rd Mar 2011, mightychewster wrote:
#59 Neil

I think that the use of NI has long since gone - years ago it used to cover the costs of healthcare and all the things you mention. It has long since fallen way short of being able to do that and income tax and all the other taxes now go into one big pot to pay for everything, it isn't used any more as an insurance - it's just another tax

Get rid of it and bundle it into income tax - it is another tax, it is not used as an insurance any more

=======================

I agree with your points, that is clear - however my point is more about the notional hypothecation as it exists in political debate rather than in a financial sense.

Take the payment of NI, having sufficient payments are very much still an insurance as the payment gives access to certain benefits and services e.g. the NHS - you will no doubt being an expat be aware that if you do not pay voluntarily into NI whilst away your entitlement to any UK NHS treatment lapses after 12 months (unless covered by the local European Health scheme) and is not recovered until you have been paying again for 12 months.

That what is notionally paid as NI does not cover the costs of healthcare, pensions and benefits which are notionally associated with it is clear, but the point I tried to make was that despite this whenever benefits, pensions, NHS etc that are notionally hypothecated to it or understood to be associated generally , the debate is littered with " I am entitled because I have paid for it" - when especially in the case of pensions for example I would contest that they have not been paid for by those using the argument, since they pay no NI and what they paid was never invested but spent on the pensions paid out in the year they paid in.

Elimination of NI is a bigger move politically than it would be financially - to most it would make no difference up front.

Think of the arguments of motorists and hauliers etc about road tax which is assumed to be hypothecated (even though it expressly isn't) - they constantly mention how much tax is paid vs the amount spent on the roads . This why politicians do not like hypothecation, it restricts their working space on policy and how to sell it.

My contention is that politically - combining NI into tax breaks a political hypothecation which then permits politicians more wriggle room. Especially if you know you need to reform or adjust parts of the budget which are linked in the populations mind to that particular tax.
I.e. if you are going to look at fairly fundamental reform of the pension system and how healthcare is funded (and by whom) etc then if there is no hypothecated tax which pays for it - then in the ensuing debate your opponent loses an argument to employ.
That being they cannot now claim to have "paid for this" the hypothecation can no longer be inferred but is subsumed into the general, Micawber discussion - money in vs money out.

"68. At 10:02am on 23rd Mar 2011, Everythings Gone Green wrote:

Whats the income tax paid by these lowlife really, after loopholes & tax scams, be very suprised if any are paying 5+ % on their bonuses'!!!!"

But you have no idea whether that's true, have you? No idea at all. Just your prejudice or maybe some hysterical headline & missinformed newspaper story you read somewhere and half remember.

Like I've said "the rich don't pay tax" is on a par with "everyone on benefits is a scrounger". Good for whichever prejudice rocks your boat but little else.

I am Disabled and I am hurting through no fault of mine,some of my benefits are taxed and I feel let down by this government. This country is becoming a third world country with the poorest getting poorer and people like me being forgotten about. This Budget will not benefit the poor the extra £45 a year not starting untill 2012 will be eaten up before then with the continued rise in the household budjet.If he does not put the extra on fuel it has already put more into the coffers by the extra tax he gets everytime the price goes up so he has no need to put the extra duty on fuel as he is getting it already.There needs to be a reduction in real terms on the fuel duty and to balance the books raise the car tax.These next 5 years are going to be one hell of a ride for the less well off but the rich will not suffer to much they never do under a Tory government.

58#

Hardly.

"83. At 11:01am on 23rd Mar 2011, ziggyboy wrote:
Exactly how will Osborne ensure that people like myself who have retired DO NOT pay NI."

Increased age allowances? Reduced rates of tax for the over 67s?

It really wouldn't be THAT difficult.

One thing that really ought to be looked at is unused or underused residential properties. Second homes by the sea, bedsits in Swindon, that sort of decadent thing. A property tax of 10% per annum on the value. Force people to pay up or sell up and release to those who NEED a home.

Who could possibly object to that?

Or should I say, who could possibly object to that and not come across as a hypocritical windbag?

AS71 @ 81

I'm not an advocate of an enormous public sector - the balance we have now is, for me, not too far from optimum - and, yes, I agree it's not obviously healthy for there to be areas of the country which are almost totally reliant on the government for gainful employment. I support measures (e.g. enterprise zones and the like) which seek to redress this.

Your specific example I'm not keen on, however. Sure, we can get growth - private sector or otherwise - fuelled by cheap labour but this is not (here in the Britain of 2011) an aspiration I think we should have. I see the argument and I understand the underlying sentiment - the rise of the BRICS, harsh and competitive world etc - but I'm not (least not yet) ready to embrace it.

It could be - we'll see, I guess, if we carry on the way we are - that our only viable economic future is one based on falling living standards for the average person but, as I say, I'm not buying that at the moment. I see falling relative living standards for us (compared to the developing world), indeed I hope this happens, it's a rightful and good long-term outcome, but in absolute terms I see us continuing to prosper - such prosperity to be based on real-value-added activities and on scientific and technological advance; and certainly not to feature, as a key factor, cheap labour.

Which bit don't you understand, Robin (82)? Happy to spend more time with you.

Whistle (various), yes that tax & spend 'hypothecation' point is important. It's completely phoney in many (most?) cases and maybe we'd be better recognising that it's really all one fungible pot. From each according to their means (tax in) and to each (spend out) according to their abilities - or lack of, rather.

"80. At 10:51am on 23rd Mar 2011, taxpayer2010 wrote:
In roman times decimation meant losing 10% of the army unit in a gruesome way - killed by their comrades.

This government (from MPs down to lowly clerks) needs to be cut by 50%, (preferably in an un-gruesome way) - what do you call that?"


Well, decimate derives from the Latin to take take/destroy a tenth (decem = 1/10 and thence to decimate via decimare) so I guess getting rid of half would be to "hemimate", from the Latin "hemi" = half.

I don't think there IS such a usage of the word, so I hereby claim the first ever use.

"If one were to hemimate Saga's posts on here, one would have done only half the job."

88 - "This Budget will not benefit the poor the extra £45 a year not starting untill 2012"

Yes but the increase in PAs by £1,000 is starting in 14 days time.

RE Post 59: Exactly so.
A Sunday paper's Business journalist proposal to get the country back on its feet, "end the 50% tax rate, combine Income Tax and NIC, freeze and then reduce Personal Allowances."
It's the classic neo-liberal concept, give the rich more money, so they will work harder, give everyone else less money, to make them work harder.
If Osborne ends up with an economy which combines high unemployment and increased profitability for business, he will trumpet an economic success, as will every Business editor in the media.

Combining national insurance and tax could result in a 12% increase in those receiving a pension. Some of these people receive their pension before 65, such as service personnel, police, nurses and some in the private sector also receive such pensions.(unfortunately getting fewer every day) Currently most pay 20% income tax on pension income (after personal allowances) Combining income tax and national insurance will result in tax being levied at 32% for these and other in similar situations. I hope some allowance has been made for this

At 11:26am on 23rd Mar 2011, AndyC555 wrote:
"68. At 10:02am on 23rd Mar 2011, Everythings Gone Green wrote:

Whats the income tax paid by these lowlife really, after loopholes & tax scams, be very suprised if any are paying 5+ % on their bonuses'!!!!"

But you have no idea whether that's true, have you? No idea at all. Just your prejudice or maybe some hysterical headline & missinformed newspaper story you read somewhere and half remember.

Like I've said "the rich don't pay tax" is on a par with "everyone on benefits is a scrounger". Good for whichever prejudice rocks your boat but little else.

......no it's not!!
Any casual observer of current affairs understands that the finacial sector scammers are manipulating the tax system to a far greater degree in monetary terms than any "scrounger"............!!!

93. At 11:43am on 23rd Mar 2011, sagamix wrote:
Whistle (various), yes that tax & spend 'hypothecation' point is important. It's completely phoney in many (most?) cases and maybe we'd be better recognising that it's really all one fungible pot. From each according to their means (tax in) and to each (spend out) according to their abilities - or lack of, rather.

========================

Misquoting Marx, you'll be exiled you know.

So far I haven't seen any mention of the 8 or 9 biggest tax dodger companies who avoided 26billion in taxes last year. Over 5 years that would clear the deficit without any extra taxes, job losses, or cuts to services. Or am I the only person here aware of the tax haven dodgers.