March 21, 2012 1 Comment
Listening to the budget I think any sensible person would agree with the soundbites coming from the Chancellor of the Exchequer. As a reminder, George Osborne talked of rewarding work, committing to dealing with the debt, making the tax system simpler, and lifting the poorest out of tax; all very laudable, and, superficially at least, entirely supportable aims.
Talk is cheap, it is action that counts, and here is where the Chancellor failed. The middle has been squeezed, pensioners are worse off, and yet the very wealthiest are made wealthier. The detail will be discussed in much better places than this blog, but I think as a brief summation Ed Miliband got it spot on: we now know that we are not all in it together.
There has got to be a moral dimension to taxation policy. When the 50% tax rate is derided as not collecting as much as predicted I see this as largely irrelevant. The evidence I have gathered in doorstep conversations over the years is the people want fairness. I see no fairness in cutting taxes for the rich, not when the rest of us are hurting.
Whilst those who earn more than £150000 will be grateful for the boost to take-home pay, those who now find themselves paying 40% as this threshold kicks in earlier will wonder why the incentive argument does not apply to them. George is squeezing the middle until the pips squeak.
Tax is used to modify behaviour. Tax on tobacco, aside from the revenue considerations, is also seen as a tool to wean nicotine addicts from their drug of choice. I am an ex-smoker; I had my last cigarette on 19th February 1982. Knowing this date so well is testament to the draw of this enjoyable, if ultimately destructive, habit. I gave up as an aide to increasing longevity. I cannot recall the price of a packet of 20 in 1982, but one of the headline figures from today’s budget will doubtless be the 37p hike in the price of a packet of fags.