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The truths they don't want you to read....

Tuesday, November 25, 2008

The Budget - a considered response

I've read the report of the Budget in a quality newspaper ("The Telegraph" - more of which anon) and finally managed to download some of the supporting detail required to understand just what is going on.

OK make that, some of the supporting detail required to make you think you understand just what is going on.

It is all utterly Political - yes a capital "P" - and superficial and the tax impacts are minimal for the average family. Just how the 'average' family will be encouraged to spend by a tiny, little, increase in weekly income when they are drowning in debt is beyond me.

The impact of the fiscal framework decisions - the macro-economic decisions behind the micro-economic farting about - meets with the approval of the financial markets, only because the policy is to release as much money into the economy as quickly as possible, meaning that some firms will be kept afloat by the inevitable flow of money (however irresponsible) into failing enterprises. Of course, the long-term prognosis is bad, as the decrease in the rating of the UK debt shows - it has become more expensive for the UK Government to borrow in the markets.

As a Labour Party tool it has been very effective, and heightens the probability of there being a May election from 'possible' to 'highly likely, all other things being equal'.

So how does this play with the winners and losers?

Earning £150,000 plus per annum will cost the taxpayer about £1,200 per annum in additional taxes from 2010. According to The Telegraph, this will be enough to persuade a high-earning young couple to give up their jobs and move to New Zealand. Bollocks.

The top 1% of earners will not walk away because of tax changes - they might if the underlying economy is knackered - because they cannot find jobs that are quite as well paid anywhere else.

The direct tax changes are largely symbolic, and not enough for the largest earners to create new tax avoidance schemes, so they should give a yield around the figures forecast, and A Good Thing too.

However, petrol duty has gone up to compensate for the temporary decrease in VAT, meaning that apart from the impact on motorists, the fishermen and bus operators will have new rates of duty applied, meaning that they will be out of pocket for more, for longer.

1 comment:

Anonymous said...

I see that MacNeil has criticised the Chancellor over petrol prices -- it is just a pity that he didn't bother to go to the House of Commons on Monday.