• Quick note - the problem with Youtube videos not embedding on the forum appears to have been fixed, thanks to ZiprHead. If you do still see problems let me know.

Wot- no budget thread?

brodski

Tea-Time toad
brodski
Joined
Mar 19, 2005
Messages
15,516
So Gordon has set out his bid for the premiership, by tinkering with the tax systems in a pretty revenue neutral way, cutting basic rate tax from 22% to 20% and abolishing the 10% “starting rate”.
Any thoughts on these , it seems pretty tame budget to me, I don’t smoke anymore so I’m not worried about the 11 pence increase on fags, and I can cope with a penny in the pint increase on beer.

All in all, not to much to get excited about, does anyone have any stringer views?

RANT! the one thing that does get me though, is the idea that journalists have that people don’t understand the term “percent”. The starting rate of tax was 10%, not 10 pence, most people paid £215 PA under the starting rate, a damn sight more than the 10p which reports refer to.
 
I wasn't keen on the budget myself. The office 'predict what's going to happen in the budget' sweepstake has just gone to someone else, all because of the reduction in income tax.
 
doesn't scrapping the 10% band mean that the budget cut will benefit the middle class and wealthy, and penalise the poor? Good solid labour principles there :rolleyes:


having read a bit on it, it refers to the £2000 above tax free earnings...so it will disproportionately affect those on poorest incomes.

Meanwhile the council tax's [which also disproportionately affects those on poorest incomes] reform report is also released today to bury its recommendations of changes to the current banding systems.....
 
Last edited:
Still reading the thing - probably have something to whine about constructive to say tomorrow.
 
andyandy said:
doesn't scrapping the 10% band mean that the budget cut will benefit the middle class and wealthy, and penalise the poor? Good solid labour principles there :rolleyes:


having read a bit on it, it refers to the £2000 above tax free earnings...so it will disproportionately affect those on poorest incomes.

Meanwhile the council tax's [which also disproportionately affects those on poorest incomes] reform report is also released today to bury its recommendations of changes to the current banding systems.....
Click to expand...

That would be true, except that the scrapping of the 10% starting rate (payable on incomes between roughly £5000 and £7000 PA was coupled with an increase in working tax credits, which would be payable to those at the lowest end of eth earnings scale. This change is most likely to impact on the lower middle class, but not significantly. I don’t know if you can really claim that Brown lowered income tax, that would very much depend on what your earnings were. All in all the changes to the tax and tax credits system are meant to be revenue neutral.
 
brodski said:
That would be true, except that the scrapping of the 10% starting rate (payable on incomes between roughly £5000 and £7000 PA was coupled with an increase in working tax credits, which would be payable to those at the lowest end of eth earnings scale. This change is most likely to impact on the lower middle class, but not significantly. I don’t know if you can really claim that Brown lowered income tax, that would very much depend on what your earnings were. All in all the changes to the tax and tax credits system are meant to be revenue neutral.
Click to expand...

You need to remember that politicians words don't have the same meaning as everybody else's.

The Chancellor "cut" corporation tax, yet he is predicting increased corporation tax revenues. How is this possible?

Well he "modernised" and "simplified" capital allowances (tax depreciation for our US friends) resulting in less qualifying for allowances and what is being spread over a longer period. So he will apply a lower rate to a higher number and get more money. Strange type of tax cut.

On income tax he cut 2% of the basic rate, but added 10% to the rate on certain income by abolishing the starting rate and a further 11.8% to certain income with his NI increase as he "aligned" the thresholds with those for income tax. Funnily enough he spent less time talking about those.

Lots of tinkering, a bit for families, a bit for old folk, an increase in business tax and a lot more complexity for the rest of us.
 
blah blah low inflation blah blah cheap mortgages blah blah no more boom and bust.

Blowing his trumpet while inflation is at a 15 year high and a massive boom in house prices means the average age of a first time buyer is now 35.

The man has a pair of big brass ballooks, I'll hand him that.
 
Jaggy Bunnet said:
The Chancellor "cut" corporation tax, yet he is predicting increased corporation tax revenues. How is this possible?
Click to expand...
ask any supply side economist. Laffer may be a good bet, a strange bit of economic theory to hear from Brown, but there you go.

Well he "modernised" and "simplified" capital allowances (tax depreciation for our US friends) resulting in less qualifying for allowances and what is being spread over a longer period. So he will apply a lower rate to a higher number and get more money. Strange type of tax cut.
Click to expand...
he didn’t promote that as a tax cut, he promoted it as a “simplification” fewer exemptions mean a simpler system ;)

On income tax he cut 2% of the basic rate, but added 10% to the rate on certain income by abolishing the starting rate and a further 11.8% to certain income with his NI increase as he "aligned" the thresholds with those for income tax. Funnily enough he spent less time talking about those.
Click to expand...
and eth overall effect appears to be revenue neutral, but with a slightly lower burden for those at the very bottom

Lots of tinkering, a bit for families, a bit for old folk, an increase in business tax and a lot more complexity for the rest of us.
Click to expand...
Can you point to the increased business tax? The headline rate of corporation tax was cut, although small business will have an increase in their rate of tax phased in over a number of years. Seeing as the vast majority of people in eth UK are on PAYE I doubt that this budget will have made things more complex for “the rest of us”, just for some people.
 
Jon_in_london said:
blah blah low inflation blah blah cheap mortgages blah blah no more boom and bust.

Blowing his trumpet while inflation is at a 15 year high and a massive boom in house prices means the average age of a first time buyer is now 35.

The man has a pair of big brass ballooks, I'll hand him that.
Click to expand...

I think that an inflation rate of 3% being a 15 year high speaks more of the good economic management that we have had over the past 15 years, rather an a current failing.
 
brodski said:
Can you point to the increased business tax? The headline rate of corporation tax was cut, although small business will have an increase in their rate of tax phased in over a number of years.
Click to expand...

Punish the little guy and reward the fat cats? Tres new labour!
 
brodski said:
I think that an inflation rate of 3% being a 15 year high speaks more of the good economic management that we have had over the past 15 years, rather an a current failing.
Click to expand...

Ummm.... Inflation is actually closer to 5% than 3%. Unless you take the CPI instead of the RPI seeing as how the CPI includes only essentials like DVD players and ipods and exludes non-essential items that the RPI includes like cost of housing and... oh, wait. Nevermind.

The last time inflation was at this level, interest rates were at 12%. The money supply is growing at record double-digit rates. The RPI has doubled since Brown took over. Where do you see this ending? Do you fear for the value of your savings? I do.

In any case, this is the perfect "jam tomorrow" budget. Everything phased in over the next 2 to 3 years.... by which time we will have a new PM and a new chancellor.
 
Arrrrgggggh budget in my eyes and brain and mind.

Many of clients are accountancy firms, tax advisors and IFAs. They want a budget summary, with commentary, on their websites by first thing in the morning. Guess what Teek's been writing all day :(

Just finished draft 1 of the main summary, am about to start the comparison with the pre-budget report.

Ask me anything :D

Except I have no time to answer! Ha ha!
 
brodski said:
ask any supply side economist. Laffer may be a good bet, a strange bit of economic theory to hear from Brown, but there you go.
Click to expand...

Nothing to do with Laffer and all to do with the tax increases that he included in his budget.

and eth overall effect appears to be revenue neutral, but with a slightly lower burden for those at the very bottom
Click to expand...

Or a higher burden if you have a low income but don't have children - like for example the student working part time who has had their tax bill doubled by abolition of the lower rate band.

Can you point to the increased business tax? The headline rate of corporation tax was cut, although small business will have an increase in their rate of tax phased in over a number of years.
Click to expand...

The capital allowance changes fund almost exactly the cut in the headline corporation tax rate on the Treasury's own figures. Good news for high profit, non industrial businesses like banks, bad news for manufacturing, utilities, transport and other capital intensive business.

Seeing as the vast majority of people in eth UK are on PAYE I doubt that this budget will have made things more complex for “the rest of us”, just for some people.
Click to expand...

What about all of the extra people who will now be drawn in to the amazingly complex and hugely confusing world of tax credits? And what incentive is there for people once they are in that system to improve their skills and increase their earnings when they face an effective tax rate of 70%?
 
You must log in or register to reply here.

Back
Top Bottom