Wednesday, 21 March 2012

A Budget for Working People

by William Wallace

Last Sunday, the Chancellor told Andrew Marr that this budget would be ‘for working people’. The contents of the famous red box have this year presented the country with plans to stabilise the economy, create a fairer, more efficient and simpler tax system and introduce reforms that put Britain back on the road to growth and recovery. The deep budget deficit which the Coalition inherited from thirteen years of Labour government has to be dealt with. After last week’s announcement that the UK economy looks set to avoid a double dip recession, the government’s Plan A now seems to be working.

What has surprised most people is Osborne’s plans for the largest ever increase in the personal allowance, raising the income tax threshold to £9,205. What this essentially means is that those on low and medium incomes will enjoy a tax break. I’m sure Tim has written about the 50p tax rate cut which people have described to be a tax cut for the rich. Official statistics show that the 50p tax rate was ineffective and damaging, as well as undermining competitiveness. Cutting the tax rate to 45p is certainly controversial and raises a few eyebrows, but it ensures that Britain no longer has the highest rate of income tax of any major economy.

Other proposals laid out include cutting corporation tax in order to boost small businesses and enterprise, cutting child benefits for families including a parent earning over £60,000, increase tax on tobacco, raise stamp duty by 7% for properties over £2m, online gambling tax introduced, anti-tax evasion measures introduced, state pension risen to £5.30 per week, £100m injected into armed forces housing and 100% relief on council tax for serving military personnel. To top it all off, the Office of Budget Responsibility has revised up UK economic growth to 0.8%.

As the Chancellor raised the red box on the steps of 11 Downing Street (no doubt making tomorrow’s front pages), the key measures laid out inside that box have proved not just to be right, but also fair. When the Leader of the Opposition, Ed Miliband, took to the dispatch box, he seemed to completely ignore the tax cuts for those on lower incomes and the anti-tax evasion plans. Miliband simply said that the budget wasn’t for the millions, but for the millionaires. What I can’t understand is how Miliband, the man who was a special advisor to Gordon Brown at the time that Brown was carrying out an agenda of excessive spending and excessive wasting (even when the International Monetary Fund were warning against it), seems to suggest that the financial climate we are in has not a thing to do with the former Labour government of which he was a member.

I should add, as someone was quick to remind me, that the 2008/9 financial crisis was global and largely to do with American banks making a pig’s ear of mortgage loans. This is true. But I was quick to remind this person that Britain’s budget deficit would not be the deepest in Europe if the previous government had not allowed spending to increase to such an extent. It’s about time that Labour issued an apology for landing us in this right mess.

This year’s budget is quite a political one. There appear to be tax cuts for those on lower and medium incomes and aggressive action on tax evaders. The Liberal Democrats have definitely got a great deal out of this budget. As a member of the Conservative Party, I am actually pleased to see action being taken to ease taxation on the poorer in society. And I am also pleased to see that spending cuts and tax cuts are in force.

My verdict on this year’s budget: a budget which is in the interests of the lower income workers, small business, and economic growth. Truly a budget for working people, and a budget for the United Kingdom.

1 comment:

  1. I am dismayed to find that the author of this article fails to mention perhaps the most harmful of current government measures to working people, namely the cuts to tax credits coming into effect next month. Tax credits act as one of the most effective and progressive ways in which to both help those struggling to make ends meet, as well as incentivising work for those on low incomes. The cuts to these working tax credits will see the number of hours necessary to recieve the payments increase by 50% as well as the threshold for recieving credits fall, significantly reduced the number of working people able to recieve these payments.

    Whilst the increase in the income tax threshold, a Liberal Democrat proposal, will undoubtedly help many on lower incomes, to suggest that Osborne's measures constitute a "budget for working people" is wishful thinking.


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