The 2012 Budget Thread

[pap]

So, are you a winner or loser from the new Budget?

 

What about the top rate of tax going?

 

The 40% tax threshold being lowered?

 

The £61K cut-off on child benefit?

[bridge too far]

Think I'm a loser

 

Age-related personal allowances to be frozen = effectively a tax on pensioners to the tune of £200 odd a year. I choose to smoke (OK I'm an addict) so that's going to hit me too but that's up to me.

 

I think very high earners are going to benefit by about £10K a year but middle-income earners (like two of my children) will lose out by the reduction of the 40% threshold.

 

I think there's going to be uproar about the extra tax on pensioners - many of whom vote Tory.

[Wade Garrett]

I've kept my child benefit, and will have to pay more of my tax at 40%. I'll investigate putting more money into my pension to reduce my loss.

 

Still, at least the 50% tax has been reduced.

 

I am a bit ******ed off to be honest.

[gaz]

Fuel rising to 150p for diesel and 145p for petrol is going to be massive. Expect protests. Tax cuts elsewhere in the budget will be topped up by the motorist....again.

[Wade Garrett]

Fuel rising to 150p for diesel and 145p for petrol is going to be massive. Expect protests. Tax cuts elsewhere in the budget will be topped up by the motorist....again.

 

So much for his idea of reducing tax on fuel as the price increases. Still, at least the 50% tax-rate is going down.

[Lord Duckhunter]

Like every budget it will take a few days for the full impact to be known.

 

The top rate of tax coming down is a step in the right direction, but I think 45% is still too high. I am a great believer in the Laffer curve and that lower tax rates generate more tax revenue. Thatcher brought taxes down and the revenue ended up with more money. I thought this particular arguement was won in the 90's, when Labour kept tax rates at Tory levels, but politics being politics, Milliband is trying to distort the arguement.If he believed that a 50% rate would bring in more money, why did Labour increase NI contributions for everyone, instead of increasing the top rate? Hopefully by the election we will have figures that will show how much the 50% bought in and how much the 45% is bringing in. Will Labour go into the next election promising to raise it back, bearing in mind they said it was temporary.

 

Child benefit should not be paid to people on large incomes IMO.

 

Raising of tax thresholds is a good thing, although I see Osborne has caught Gordon Brown's fiscal drag bug.

 

 

Great to see a statement being sent to everyone showing where our tax goes.

 

I would like to see tax and NI combined, so people can really see the amount Govt takes from us.

 

Interesting to note the the OBR say that the richest 1%, account for 27% of total tax revenues.

 

No doubt the BBC are lining up nurses, dinner ladies and lollipop men to moan on about how poor the Tory's are making them. And the lead item on the 6 o clock news will be the 5% cut, which the OBR estimates will cost 100 million, chicken feed in terms of GDP and will be cost neutral when the other measures are taken into account.

[bridge too far]

Thanks Wade Garrett for reminding me that I'll also lose out on petrol prices - I was convinced he was going to regulate / compensate for petrol price increases.

[John B]

Cameron gives millionaires like himself a £40,000 tax cut. And Granny's are paying for it

[Minty]

The Budget 2012: (Courtesy of @laura_barnard on Twitter)

 

[dune]

I think it was a good budget and is another step towards repairing the mess left by Labour.

[John B]

I think it was a good budget and is another step towards repairing the mess left by Labour.

 

So where is the plan for growth

[bridge too far]

So where is the plan for growth

 

Financial analyst saying there isn't one.

[dune]

So where is the plan for growth

 

Reducing the 50p tax rate is effectively announcing us as being open for business. At 50p we had the highest tax rate in the G20 FFS.

[dune]

Reducing the 50p tax rate is effectively announcing us as being open for business. At 50p we had the highest tax rate in the G20 FFS.

 

I should also add that Socialist types will never get it.

[buctootim]

A report into the highest rate, introduced by Labour in 2010, had found it had raised just a third of the £3bn initially predicted, Mr Osborne said. "No chancellor can justify a tax rate that damages our economy and raises next to nothing."

 

So a billion pounds is next to nothing. Odd then that he has introduced a new tax on properties over £2m which according to Savills will raise £314m. A cynic might think that many Tory MPs were being hit by the 50% tax rate but have no plans to sell their home counties inherited piles.

[Lord Duckhunter]

I should also add that Socialist types will never get it.

 

They see the tax system as a way to punish people, not maximise revenue.They still want the pips to squeak.

 

Labour put NI up for everyone, why didn't they increase the top rate of tax instead? Because they know full well that just increasing tax does not bring in more money. By the next election we will know how much revenue the top rate will bring in. Peoploe can then vote accordingly, my betting is that Labour will queitly drop their oppostition to this and will not go into the next election promising to increase tax.

[pap]

A report into the highest rate, introduced by Labour in 2010, had found it had raised just a third of the £3bn initially predicted, Mr Osborne said. "No chancellor can justify a tax rate that damages our economy and raises next to nothing."

 

So a billion pounds is next to nothing. Odd then that he has introduced a new tax on properties over £2m which according to Savills will raise £314m. A cynic might think that many Tory MPs were being hit by the 50% tax rate but have no plans to sell their home counties inherited piles.

 

On that note:-

 

http://www.bbc.co.uk/news/uk-politics-17463207

[Lord Duckhunter]

Here we go, exactly what I wrote earlier.

 

Rachel Reeves was asked if Labour would reverse the 5% cut at the next election.

 

Reeves- "we wouldn't have cut it",

 

Interviwer- "but would you reverse it",

 

Reeves-"we wouldn't have cut it"

 

Interviewer-"I asked you if you will reverse it"

 

Reeves- " if the elction was tomorrow, we would".

 

Interviewer-"But you know the election isn't tomorrow, will you reverse it at the next election".

 

Reeves " I can't comment on future tax plans".

 

 

Just heard on PM that the IFS have said Osborne was right about cutting the rate.

 

 

 

They're just playing politics with it.

[trousers]

Like every budget it will take a few days for the full impact to be known.

 

The top rate of tax coming down is a step in the right direction, but I think 45% is still too high. I am a great believer in the Laffer curve and that lower tax rates generate more tax revenue. Thatcher brought taxes down and the revenue ended up with more money. I thought this particular arguement was won in the 90's, when Labour kept tax rates at Tory levels, but politics being politics, Milliband is trying to distort the arguement.If he believed that a 50% rate would bring in more money, why did Labour increase NI contributions for everyone, instead of increasing the top rate? Hopefully by the election we will have figures that will show how much the 50% bought in and how much the 45% is bringing in. Will Labour go into the next election promising to raise it back, bearing in mind they said it was temporary.

 

Child benefit should not be paid to people on large incomes IMO.

 

Raising of tax thresholds is a good thing, although I see Osborne has caught Gordon Brown's fiscal drag bug.

 

 

Great to see a statement being sent to everyone showing where our tax goes.

 

I would like to see tax and NI combined, so people can really see the amount Govt takes from us.

 

Interesting to note the the OBR say that the richest 1%, account for 27% of total tax revenues.

 

No doubt the BBC are lining up nurses, dinner ladies and lollipop men to moan on about how poor the Tory's are making them. And the lead item on the 6 o clock news will be the 5% cut, which the OBR estimates will cost 100 million, chicken feed in terms of GDP and will be cost neutral when the other measures are taken into account.

 

Thanks for saving me the hassle of posting on this thread.

[pedg]

I am a bit bemused by the logic for reducing the 50% tax band. It's going because its claimed it did not bring in as much as expected, the reason given is that many people subject to the tax were paid early before it came in. However surely that logic only applies to the first year? If it stayed in place then that method of avoiding it would not be available?

[pap]

Raising fuel duty is a total disaster. Everything gets more expensive. People and businesses have less money to spend.

 

Way to go, guys - that's how to stimulate an economy.

 

Lord D - I like your posts but I do wish you'd refrain from diluting them with your hypothetical distaste for what Labour might have done.

 

Your point about volume in the economy is completely correct though. Economies work when there is demand for stuff, and financial economies generate demand when people have cash to spend. Not going to happen with this budget, and why would it? It comes from a government who responded to the highest levels of unemployment in 17 years by gifting millions of free labour hours to multi-national corporations.

 

One last thing, the abolition of the 50% rate when so many families are being hit is indefensible, but perhaps the only co-ordinated part of this budget. Fuel duty is going up, and those Bentleys don't half swallow the petrol.

[CB Saint]

How far does the increase in pension offset the reduction in age allowances ?

 

I thought the increases in stamp duty were good, it will certainly stop the offshore companies wheeze the rich use.

 

The 50p tax band reduction was always going to be a hot potato. Irrespective of whether is was right or wrong, it gave labour an open goal for the headlines.

[dune]

How far does the increase in pension offset the reduction in age allowances ?

 

I thought the increases in stamp duty were good, it will certainly stop the offshore companies wheeze the rich use.

 

The 50p tax band reduction was always going to be a hot potato. Irrespective of whether is was right or wrong, it gave labour an open goal for the headlines.

 

Which is why they brought it in in the first place. It was all part of their scorched earth tactic.

[trousers]

the abolition of the 50% rate when so many families are being hit is indefensible

 

Maybe they should have raised it to, say, 75% to be really fair to all those hard hit families...

[Minty]

Some facts to digest: According to the treasury's OWN figures, the 30% of households at the lowest end of the income scale are set to lose out the most. Figure B2 is the one you're looking for in the following document. And yes, it says the top decile will lose out most, BUT this DOESN'T include the reduction in the highest tax band, so is not representative of the overall picture.

 

http://cdn.hm-treasury.gov.uk/budget2012_annexb.pdf

 

So, rather than focusing on those at the upper end of the scale, what about these impacts on the lower end?

[badgerx16]

I am a bit bemused by the logic for reducing the 50% tax band. It's going because its claimed it did not bring in as much as expected, the reason given is that many people subject to the tax were paid early before it came in. However surely that logic only applies to the first year? If it stayed in place then that method of avoiding it would not be available?

 

Correct.

[Hockey_saint]

Here we go, exactly what I wrote earlier.

 

Rachel Reeves was asked if Labour would reverse the 5% cut at the next election.

 

Reeves- "we wouldn't have cut it",

 

Interviwer- "but would you reverse it",

 

Reeves-"we wouldn't have cut it"

 

Interviewer-"I asked you if you will reverse it"

 

Reeves- " if the elction was tomorrow, we would".

 

Interviewer-"But you know the election isn't tomorrow, will you reverse it at the next election".

 

Reeves " I can't comment on future tax plans".

 

 

Just heard on PM that the IFS have said Osborne was right about cutting the rate.

 

 

 

They're just playing politics with it.

 

Isn't that a bit like going around every student union promising that if you were elected, you'd remove student loans? and then insisting you only said that if YOU were elected and not just in government? Lesson learned "It matters not which political wing you sit on of the politics bird, you are essentially all the same."

[corky morris]

Loved it when Osbourne said 'tax evasion schemes are repugnent' and completely forgot about Ashcroft having not paid any for years whilst living overseas & still being a Lord whilst donating many millions to the Tories................FWIW, the 50p band is too high. Whats worse is VAT at 20%. People are more likely to pay it if it were 5 or 10% whereas everyone who wants some work doing to their house or needs a boiler fixing is always asking for a cash deal.

He also needs to look at the taxation of dividends.

[corky morris]

You cant trust any of them Yellow, blue or red............................

[buctootim]

Maybe they should have raised it to, say, 75% to be really fair to all those hard hit families...

 

Taxing anybody half their income is a little immoral, Id rather the top tax rate was 40%. The problem isnt tax rates, its the fact that some people are paid hugely inflated wages unrelated to performance. FTSE100 directors pay has gone up three times faster than any other group since 2000 - despite profits and share prices being largely static.

 

People who run their own businesses are entitled to unfettered rewards. By contrast paid employees like Bob Diamond of Barclays who take no personal risk, get paid £14m pa and receive payoffs big enough to retire on whether a success or failure are as big a parasite on the UK as benefits cheats imo.

Edited 22 March, 2012 by buctootim

[Hockey_saint]

You cant trust any of them Yellow, blue or red............................

 

so true. I feel a leaning towards equality and fairness i.e. the left as opposed to the party of inequality but these are ancient ideals these days as they're all very much into inequality these days.

[Jonnyboy]

Maybe they should have raised it to, say, 75% to be really fair to all those hard hit families...

 

Oh for the good old 1970s when it was, what, 98%?

[SuperMikey]

You cant trust any of them Yellow, blue or red...................

 

I'm finding that now as well. The Lib Dems are just settling for little victories now instead of trying to influence the budget overall. The Tories had better hope that businesses are tempted to come here by this tax rate cut, otherwise they'll be out on their arses in no time at all.

 

PS: Danny Alexander is such a little scrote.

[Saintandy666]

Well, I am very pleased that the Personal Tax Allowance is being raised so much. I don't think minimum wage earners should be paying income tax. I'm sceptical about the reduction of the top rate band, but if it does lead to a greater yield from the rich, I am content with it. I am also pleased at the closing of the loopholes, and it seems the hint of a so called 'tycoon tax', which is only fair as not all of us can afford fancy accountants. I'm surprised our debt as of GDP is only going to hit 73.6% at peak(lower than most G8 countries), but I guess that is because it was kept low for many years before the crisis.

 

I want to see how it pans out first.

[pap]

Maybe they should have raised it to, say, 75% to be really fair to all those hard hit families...

 

No, they should have just kept it as it was, for their own sakes, as much as anybody elses.

 

This is political suicide, especially since they've weighed into the pensioners to help pay for it.

 

And all this bolox about their new schemes making 5 times as much money. It's all crap. It's the political equivalent of them saying "yeah love, I'll definitely call you in the morning".

 

The Conservatives have long had a reputation for being the Nasty Party. During the final years of opposition, it did everything it could to present itself as cuddly. I have to hand it to them - they've been deft in getting a lot of their policy through, waving the Lib Dems in criticism's way ( tuition fees = political masterstroke ). However, elements of this budget, such as the 50% rate cut or the so-called granny tax, have TORY punched through them like seaside rock. They can't pin this on Cleggy.

 

I enjoyed your point as always trousers - but you're proceeding from the premise that a decision had to be made on 50% tax. It's not the case at all, and in fact, I'm shocked that this is even a priority for a Government that claims to be trying to address the financial mess. Here's an idea. Why not implement all this loophole dodging stuff and just forget about the 50% tax cut?

 

I am increasingly of the view that this is a smash and grab Government, not really that arsed about governance, but more concerned with helping out as many of its mates as it can, be it through allowing the fronds of private industry to wrap around institutions like the NHS, or just giving them large tax cuts. It's indefensible because these people at 50% can afford it. The middle-to-lower income losers cannot, especially with the rise in fuel duty coming their way.

[Frank's cousin]

What did anyone expect... typical Tory budget that sees the rich better off and it paid for by the lower and middle - its what this country deserves though as there are many who seem to think the Tory's have the country's interest at heart rather than their own. Everyone knows the books need to be balanced the defecit reduced etc... and whatever Dune and his fellow right wingers like to shout about, the truth is there are more than one way of doing this (and thats according to independent economists) - The Tories have convinced the naive that the rich being better off is good for the country - while we pay more for fuel, more tax etc. Have to admit cant work out whether the Tory hoodwinking is because they are so deviously clever, or teh nation as a whole ignorant and thick as ****e

[trousers]

No, they should have just kept it as it was,

 

Ok, perhaps raising it to 75% in one fowl swoop was a little hopeful on my part. I guess we need to introduce 'fairness' in stages. On reflection, i think they should have raised it to 55% this time around and then 5% per year until the end of this parliament.

 

Surely this is the best way to squeeze more than 27% of the country's tax receipts from the top 1% of earners?

[dune]

Well, I am very pleased that the Personal Tax Allowance is being raised so much.

 

Are you ginger Andy?

[Patrick Bateman]

Well, I am very pleased that the Personal Tax Allowance is being raised so much. I don't think minimum wage earners should be paying income tax. I'm sceptical about the reduction of the top rate band, but if it does lead to a greater yield from the rich, I am content with it. I am also pleased at the closing of the loopholes, and it seems the hint of a so called 'tycoon tax', which is only fair as not all of us can afford fancy accountants. I'm surprised our debt as of GDP is only going to hit 73.6% at peak(lower than most G8 countries), but I guess that is because it was kept low for many years before the crisis.

 

I want to see how it pans out first.

 

Why the bloody hell not? Everyone uses the same services, NHS, libraries etc., so why shouldn't everyone pay a little income tax to pay for this? I actually liked the 10% tax rate, maybe they should introduce one at say 5%, just so that everyone is contributing SOMETHING in income tax?

 

The whole system is messed up, all the parties are the same, MPs are all dodgy scrotums.

[dune]

Why the bloody hell not? Everyone uses the same services, NHS, libraries etc., so why shouldn't everyone pay a little income tax to pay for this? I actually liked the 10% tax rate, maybe they should introduce one at say 5%, just so that everyone is contributing SOMETHING in income tax?

 

The whole system is messed up, all the parties are the same, MPs are all dodgy scrotums.

 

There are some decent MP's, but sadly they are limited to the right of the Conservative Party.

[saintbletch]

No, they should have just kept it as it was, for their own sakes, as much as anybody elses.

 

This is political suicide, especially since they've weighed into the pensioners to help pay for it.

 

And all this bolox about their new schemes making 5 times as much money. It's all crap. It's the political equivalent of them saying "yeah love, I'll definitely call you in the morning".

 

The Conservatives have long had a reputation for being the Nasty Party. During the final years of opposition, it did everything it could to present itself as cuddly. I have to hand it to them - they've been deft in getting a lot of their policy through, waving the Lib Dems in criticism's way ( tuition fees = political masterstroke ). However, elements of this budget, such as the 50% rate cut or the so-called granny tax, have TORY punched through them like seaside rock. They can't pin this on Cleggy.

 

I enjoyed your point as always trousers - but you're proceeding from the premise that a decision had to be made on 50% tax. It's not the case at all, and in fact, I'm shocked that this is even a priority for a Government that claims to be trying to address the financial mess. Here's an idea. Why not implement all this loophole dodging stuff and just forget about the 50% tax cut?

 

I am increasingly of the view that this is a smash and grab Government, not really that arsed about governance, but more concerned with helping out as many of its mates as it can, be it through allowing the fronds of private industry to wrap around institutions like the NHS, or just giving them large tax cuts. It's indefensible because these people at 50% can afford it. The middle-to-lower income losers cannot, especially with the rise in fuel duty coming their way.

 

Worth commenting on this for the phrase "allowing the fronds of private industry to wrap around institutions like the NHS" alone. Wonderful, but to your points.

 

I'm not sure any party or coalition can do anything that looks well thought through and creative at this time. Their hands are so far tied behind their backs that this is really arranging deckchairs. Whether those deckchairs are on the Titanic or a super yacht, I guess time will tell.

 

As for the nasty party, I'd probably go with the nastier party and as I said I'm not sure any party has the room to truly do what they would like to do.

 

But what has got me a little worked up is the usual spin that surrounds these moves. Removing the 50% tax rate is a driven by symbolism and Tory ideology. Not meant as a criticism - the Conservatives got the votes to negotiate their way into coalition government and 50% tax rates are an idealogical anathema to them. Fine. But to then tell us that the motivation to do this comes from...

 

1) Those wealthy enough to fall into the 50% bracket are adept at avoiding tax at this level therefore it is not effective as a means to generate tax receipts

2) A 50% tax rate will deter wealthy entrepreneurs from coming to these shores or worse 'force' wealthy entrepreneurs to move themselves and perhaps their company to a country that allows them to keep more of their income

3) We are closing loopholes and raising taxes so the net effect of the budget will be that those that fall into the old 50% tax band will pay much more anyway.

 

...is pretty disingenuous in my opinion.

 

OK, I can accept 1) and I can accept that it's not easy to stop creative avoidance of tax.

 

But if 2) is true then surely if 3) comes to pass, the wealthy will be thinking to themselves...

 

God I wish we had the old 50% rate where an honest Joe could simply avoid paying the tax, this new regime means I keep less of my wealth - I'm off to another country with lower rates or better loopholes.

 

To tell us that they were genuinely worried that wealth generators would leave the country due to a punitive, but ineffective headline tax rate; but by changing this system so that they actually pay far more they will now happily stay doesn't make sense. Perhaps it's me?

 

The other issue is as you've already suggested pap, we weren't a fledgling democracy/economy introducing its first taxation system where you might argue that a 50% rate isn't the right place to start. I might even agree with the argument about not putting off the wealth generators in such a system. Instead, we already HAD a 50% rate, an enormous debt from previous regimes and public sector workers just about to start to come to terms with the impact of the cuts that haven't even started to be felt yet.

 

Making this move in that context could be an absolute killer for the Conservatives at the polls next time around - especially if those 250 doctors and surgeons also stand against them. And hitting pensioners, the small tranche of our society that still routinely bothers to place their 'x' on the ballot card probably won't look that smart a move either.

 

As Orwell might have said "We're all in this together but some are more in it together than others".

[John B]

Reducing the 50p tax rate is effectively announcing us as being open for business. At 50p we had the highest tax rate in the G20 FFS.

I think you are a little niave if you believe that

 

By the way the papers have an interesting take on the Budget

 

http://twitpic.com/8zn92i

[dune]

I think you are a little niave if you believe that

 

By the way the papers have an interesting take on the Budget

 

http://twitpic.com/8zn92i

 

It's certainly a headline grabber of a section of society that it's best not to ruffle, but it's not going to affect them a great deal. Pensioners have never had it so good.

[trousers]

I think you are a little niave if you believe that

 

By the way the papers have an interesting take on the Budget

 

http://twitpic.com/8zn92i

 

My personal favourite is the Sun front page.... :-)

 

[View From The Top]

Personally I would have like to have seen the 50p rate threshold raised to £250k so the mega wealthy still paid they own fair share whilst allowing the enterprise spirit to continue.

 

Corky is right about VAT. the 20% is a killer. We've just had an extra bathroom fitted and that was done as a "foreigner" thus saving £££. Having the main bathroom done in the same way. Just means HMG are dipping out on revenue as people revert to a cash/off the books, economy.

[buctootim]

My personal favourite is the Sun front page.... :-)

 

*

 

Wow. George has united the media across the spectrum. It takes a special kind of incompetence to do that

[dune]

It was a brave budget and if we start reaping the rewards (and I think we will) it will pay off and we'll have a Conservative victory in 2015. It's now up to business to start investing because George Osborne has given them the incentive to get this country moving again. i genuinely believe that George Osborne will go down in history as one of the best chancellors we have ever known.

[trousers]

*

 

Wow. George has united the media across the spectrum. It takes a special kind of incompetence to do that

 

Gordon Brown was quite adept at it too :-)

[buctootim]

Gordon Brown was quite adept at it too :-)

 

Party politics aside, Brown was bright but wrong. George is thick and wrong!

[trousers]

George is thick

 

Source?