Saturday, 24 March 2012

The Budget and the tribalists

Apparently, all that stood between the continuation of Britain's greatest depression since the 1870s and the sunlit uplands of post-Cameronian entrepreneurship was the abolition of the 50% tax band.  Now that this little victory for the parasite has been won, we can all look forward to the stunning success of attracting rich people to give larger amounts to bankroll the Tories into the 2015 General Election.

At the same time, the Liberal victories have been a few but nevertheless significant.  The implementation of a higher rate of stamp duty on £2m property transactions, and the removal of loophooles that meant that plutocrats could pay a lower proportion of tax than the average first-time buyer are important, as they start taxing wealth and assets that can't be hidden in the same way as income.  The increase in personal allowances is welcome.

Gorgeous George needs better PR.  As the general level of personal allowances rises, the case for special treatment for pensioners reduces.  Put it simply, if everyone has a £10,000 threshold then why should pensioners be any different?  Instead, the Tory press has fallen for Labour obfuscation and portrayed the removal of the special treatment as being the introduction of a "granny" tax.  There is a moral justification for a reasonable level of income being exempt from tax, but that applies to all citizens, whether or not they join the ranks of the self-styled "senior". 

Labour are making it out as a budget for millionaires, which it is, provided they don't try to acquire assets that attract tax.  More significantly, it continues many Tory idiocies such as regional pay arrangements in the public sector (that no manager seems to want), but does not really move infrastructure investment forward.  Buried in the small print are some quite significant possibilities, including a mansion tax for non-doms, going forward.

There are some good ideas in there, but there needs to be a more full and frank discussion of tax. My modest proposal would include a flat rate personal allowance, with 20%, 30%, 40% and 50% bands (the latter probably kicking in at aorund £200k on taxable income) - with a view to reducing the number of people who face very odd tax rates in the middle of the £30-45k salary range.  Closing exemptions and starting to shift more of the burden from direct income tax onto land and consumption would also be worthwhile.

Tax and economics are difficult because they are nuanced, but I would give Osborne around five out of ten for this Budget.  And given the cretinism he normally displays this is reluctant praise.

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