The Tartan Taxman delivered what is likely to be – one way or the other – his last budget today.
I haven’t read everything in the budget but a couple of things jump out:
The 10p/£ lower tax rate has been abolished and replaced with the standard rate of the tax
Result: People on low incomes will pay more tax
The threshold for higher rate tax has been increased to £43,000 from 2009
Result: High earners will pay less tax
The 19% flat rate tax for small businesses has been raised to 22%
Result: Small businesses will pay more tax
Corporation Tax has been reduced by 2p/£
Result: Large corporations pay less tax
Fuel Duty is being increased by 2p in 6 months time
Result: People who rely on their cars (such as those who live in rural areas) will pay more to get about
Road Tax is being increased to £300 this year and £400 next year for new 4×4’s
Result: People who live in remote areas will pay more to get about
The NHS in England will get an “extra” £8bn funding
Result: The Scottish, Welsh and Northern Irish NHS will get another £2bn between them as a result
..and here’s me thinking that Socialism was the lowest standard of living for everybody, when in reality it is the lowest possible standard of living for the already less well off…by gum!
it is rediclous that the poor are as good as subsidising the rich, however tax credits will make up for a fair bit of the windfall. Still the poorest who dont qualify for tax credits are screwed. I say put income tax to 50% for those who earn over 100,000 pounds, and have a more progrssive socially equtiable tax system, less tax for the poorest, more for the richest, we will raise more money, leading to better services along with reducing the rich poor gap.
Tax credits will help but the whole tax credit system is a minefield and it won’t make enough of a difference to the people on really low incomes. Did you know you can earn over £30k a year and still claim tax credits?
The problem with your suggestion for a 50% tax on high earners (a Lib Dem policy by the way) is that it discourages people from doing the kind of jobs that attract the high salaries and will end up driving the likes of consultant surgeons, multinational company directors, etc. out of the country. A factory worker does as useful a job as a doctor or an airline pilot but does he deserve the same salary and the same high standard of living? I’m in a fairly low paid job myself but I used to have a job earning double what I do now. I don’t think that I deserve the same salary that I had then doing the job I do now.
I understand your argument, however, many leading economists beleive that the revenue maximising rate of taxation is nearer 60% for the highest earners (cant rembember the links at the moment), that being the point where tax revenue is maximised, this will be before the watershead point at which the high paid quit or move else where. However, that said many of the highest paid can easily move to the US or have their wage paid there, and remain in the US or elsewhere for enough days a year to pay their taxes as opposed to our taxes. In out electronic globalised world, where technology has deemed many borders meaningless people can easily escape tax.