Osborne hands out tax cuts - for companies
ToryDem chancellor George Osborne handed a massive tax boost to business today in his first budget. But the move will be cold comfort for public sector suppliers, banks or video games developers. As expected VAT goes up from 17.5 per cent to 20 per cent on 4 January next year. Corporation tax will be cut by a penny every year …
Never gonna learn, these people.
Yes...... The black market in child tax credits and housing benefits is really booming, isnt it?
Electrical flexes are subject to VAT, and with Plastic bags becoming chargable there is little comfort in the knowledge that Tangerines escape any tax rise..... I suppose they will have to get their jollies screwing the little guy over instead!
Income Tax personal allownce goes up to £7465, saving around £200 p.a. for low income workers.
VAT goes up to 20% while 'essentials' stay exempt.
A 'low income' worker would have to spend approximately £10,000 on VAT rated products to negate the gain from changes to income tax.
£10,000 (VAT inc) is around £8510 (VAT ex) --> £8510 x 1.2 = £10212
How many people on 'low incomes' have a spare £10,000 (after food, housing costs, etc) to buy 'luxuries'?
So what your saying is that low income earners will be taxed less by having there personal tax allowance go up, even with the increase in VAT?
Well correct me if im wrong but i believe that is the whole point...
Personally, i cant see anything in this budget that jumps out as being a waste fo money or tightening where its not due. So i have to say well done ConLibs, this actually looks like a sensible budget.
Who woulda thunk it?
No problem, they can just put it on their credit cards.
how DARE we allow low income workers a little extra money in the pocket!
Why someone ought to go round their houses and take that extra £200pa back by force, why should poor people be allowed to keep any of their own money!
How about your fuel, to get you to your low-income job? That's taxed and will rise with VAT.
How about your clothes? Items such as safety boots or any other adult-sized clothing are not exempt from VAT.
The lower your income, the harder you are hit by non-scaling taxes like VAT. Not that Osborne would know; he's never had a low income.
Wow, I never knew low income workers were spending 10k£ PA on Boots and Clothing....
[pedant]
Actually, safety boots ARE exempt from VAT. It's items like safety trainers which aren't exempted.
[/pedant]
the point is that high-income workers almost certainly aren't spending anything like a similar proportion of their income on the same stuff.
The "essential" thing is just bizarre anyway. VAT is levied on feminine hygeine products, for example. That kind of little luxury that's so unnecessary for working class folk....
as everyone rushes in to buy expensive stuff before the VAT rise. And those who already own a "Beat the VAT increase" sign will be able to get another round of use from it.
All this does is balance the books - it doesn't pay off the debt - it just stops it growing by 2016 (It will go from 10% to 1%).
Most interesting figure I heard is that we will be paying £250 Billion in debt interest over the this parliament . Another interesting one is that some people claim over £100 000pa in housing benefit! Its now going to be limited to £400 per week - Nice benefit for those who can get it (ie those not working)
Its good to hear that alot of departments will be cut by 25% though - I cant wait to hear the piggies squeal.
Borrowing and Debt. Two totaly diffrent things.
What happened to the promise of compulsory serving of asparagus at break-fast and free corsets for the under-fives?
Didn't they only put that in for a joke? or was that the female vote?
at least we can calculate VAT figures in our heads....
If the total cost of an item is £100 and VAT is 20%, most people will tell you that the VAT £20 and the item is £80. Most people would therefore be wrong.
No-one needs to work out a VAT cost that has already been added !
It's the (ex VAT) prices that will be easy to work out (£100 ex VAT) mean £120 ! Well Done.
Divide by 6, so £16.67 for your example. Easier than the 6 point whatever-it-was-before.
That's something I could never understand; create a whole new level of bureaucracy just to hand back something you've already taken.
Umm, don't take it in the first place?
Generally a very hard but balanced budget. Interest groups will only focus on their own points of interest, seeing hard done by, and protesting against.
The development of tax breaks and reduction of benefits to force job creation should be interesting. Will potential employers take the additional profit or create more jobs? Will those who are defined as long term unemployed seek work or has their culture become too ingrained?
Cultural changes for our boom now bust society – let the rioting begin!
Not much chance in additional government IT contracts – small scale only.
Hmmm…except for the rise in VAT it probably wont effect me in the short term – have to plan for the longer term though. Now, if i was close to retirement – when's that going up to 66?
Pity we had to endure Ms Harperson throwing a hissy fit post speech, pushing her own interests with little relation to the budget as given. Labour need to get there act together.
Sorry, but I think you have your sums upside-down.
A low income worker BENEFITS from the reduction in income tax.
They would have to spend your threshold value of '£10,000' on luxuries in order to negate that benefit.
So you are right, most low-income workers will not spend 10k on luxuries. This will mean they get a NET SURPLUS from the two changes you mention.
Bottom line: a GOOD THING for those people.
NOT SO GOOD THING for people who spend lots on 'luxuries'!
That's the best way round, in my opinion.
Is that gone?
Scrapped?
Rebranded?
Or been hidden in with other changes?
Why don't the tax avoiding millionaires in the Tory party start by paying the tax THEY ARE SUPPOSED TO. They are odious cunts in that respect, it has to be said. (Apologies for using strong lanugage El Reg, it's how I feel)
When I read the sub-headline "VAT up 20%"
The article reveals, not quite as bad as I had thought!
Up by 2.5% to 20%, that is much easier to swallow.
The best news is tightening up on housing benefit. That'll help push rents a little lower for the priced-out who don't get benefits. And house prices too, as lower rents make them that little bit less attractive to property pimps. But still nothing to incentivise owners of empty properties to bring them into use (or rather, penalties on hoarding).
The other good news is of course the reductions in corporation and employment taxes.
Now we just have to wait to hear what's getting cut!
I think you'll find it's a 14.3% increase in VAT.
And the upside, is that they'll only need to drop vat 12.5% to recover that 14.3% increase!!
Whilst there's nothing worse than I'd expected there particularly, I'm amused by SureStart only being for first children - kinda like encouraging the native population to halve.
VAT and other indirect taxes are never fair. They impose a disproportionate tax burden on low and middle income earners. They benefit the wealthy because they spend a smaller proportion of their earned income and hence pay a lower proportion of that income as taxes. The hidden agenda of indirect tax supporters is always that it reduces the taxes paid by high income earners.
The poor may not be so hard hit because they get other social benefits from the state but middle income earners will surely share increased burden.
Fair taxes can only be progressive. Increased reliance on indirect taxes is never fair.
Any proposal to reduce commercial bank's risky behavior is to be welcomed. But I would expect the more rational approach would have been to use legislation to curb risky behavior. Now the public sector will have to employ a set of professionals to do subjective risk analysis on banks balance sheets to impose taxes. Lets see how risk can be quantified and taxed. Sounds good but may not be practical. And may not be the most efecatious policy.
The tax allowance has increased, so low income workers will receive more in their pocket.
VAT goes up. The low income worker is still going to come out quids in. Chances are they - being low income workers - won't be spending as much on non-essentials than a middle or high income earner. So they should definitely be quids in and benefit from these tax changes.
Personally, I don't have a problem with that. Life is hard as a middle income earner, going to be even harder if you're a low income earner, so I say, let them have a bit more.
Fairness? Why is is fair that someone who earns more should pay a higher rate of tax just because of that?
If a low income earner and high income earner are taxed at the same rate, then the higher income earner actually pays more actual tax to the government. Everybody is charged at the same percentage rate. That's fairness. where something applies equally to all.
The current tax regime isn't fair. The more you earn, the higher the percentage rate of tax you pay.
If you don't like the idea that poor people get a bit more as a result of the changes, then logic also requires, that you don't agree with the tax system in general.
IR35 came about, really through jealousy. Oh sure, the big corporate consultancies lobbied for it, but the Labour government and Dawn Primarolo supported it, if they were honest, because they saw it as rich people making even more money by 'working' the system.
Low paid civil servants along side highly paid IT contractors. I encountered it personally, I think most contractors have..being ribbed about how much money they earn.
"Look Mr. Civil Servant, if you want to earn the money I do as a contractor, then *you* go out and do it". But few really did. Didn't have the right go-getter confident personality you see, happy there in their safe, cushy low paid stress free jobs, without any pressure from their manager to deliver to time and to budget, where there's no competition, where they can claim an extra 13 days holiday a year, disguised as "sick leave".
Along came IR35., and what a f**k up that was. And we told them it would be..and we were proved right..but you see, too embarassing to overturn legislation that doesn't work isn't it Mr Brown? Not big enough to admit they got it wrong. Total a*holes.
I'm sure most people would have had more respect for them if they admitted they got it wrong and simply put it right. That would have been the right thing to do.
They had IT professionals, accountants and lawyers, business leaders all telling them they'd got it wrong.
Chris,
The point is that milionaires *do* pay the tax they're supposed to. If they didn't, it would be tax evasion and illegal and they'd risk prosecution and imprisonment.
I think what you really mean, is that it's not right that overall, they get away with paying a reduced amount of tax on their income. That's not illegal, it's within the rules, if they know what the rules are and employ good accountants to get around the rules. It's called tax avoidance. It's legal.
The way one deals with this is by introducing new legislation and making what are currently legal activities and make them illegal.
However, being rich c**nts are you so eloquently put it, they'll use their massive financial resources to try to find other ways around the rules - other legal ways, that is.
I doubt that all avenues can be closed down entirely.
And I doubt that, taxing a few hundred millionaires, given they'll seek other ways around paying tax, is really going to make that much difference to the tax income the government receives, at least not as much as taxing the other 20 million workers a little more.
And these people, can take themselves off shore, to tax havens, or move completely.
These millionaires are also business leaders, and we need these people to help our economy.
So whilst things may not be fair, at the end of the day, it's a question of being pragmatic.
I'd stop worrying about the rich and feeling jelous, and I'd try to figure out a way of making yourself rich rather than feeling bitter at those that have made it.
And incidentally, I'm flat broke..as flat broke as it is possible to be.
shum mishtake chance-lor'?
It continues the myth that HB is a drain on resources.
In fact it is a nice little (hush-hush) earner well exercised at local, regional and national levels.
Say, 30,000 council houses all built in the 1960's with rent in region of, say, £80 per week.
That makes for a potential income of £2,400,000 per week.
Of course then there are the registered social landlord bank account auto-clawbacks courtesy of central government (well, civil servants really).
It is time that the "HB drain" myth were busted truly, completely, accurately and openly.
threshold of start of tax to go up....so more people earn/take-home more money...
So: What happens if you are in receipt of child tax credit/working tax credit ?
Your "income" is higher, so the amount you receive back from the revenue is lower.....
Housing benefit is paid by the local council.....so where the £100,00.00 claimant lives I do not know....probably not far from Westminster.
HB really has accountants swarming over it - the example I gave shows potential income of £2.4 million per week.
That level of income is probably more than the whole lot cost to build way back then when they were built. It also attracts a lot of interest from people trying to get their hands on it.
Local Authorities want their share, Regional Assemblies want theirs and of course central government controls the lot by act of parliament (courtesy John Prescott and why he agreed to the terms and conditions I'll never know. Maybe he didn't even read it? Acted on an assistant/aides advice perhaps?)
So present accounting standards and methods are very much biased against declaring the mega amounts received with the minimal amounts outlaid. It is after all very much invested in vested interest to the core)
Housing benefit is not just paid to people living in council properties. Many people live in private rented accommodation or housing association properties and claim housing benefit to help pay for the rent partly or in it's entirety.
Personally, i can't understand the benefit culture as people say that they are better off on benefits which is a load of rubbish - it may be initially but once you've stuck at a job for a while and move up the ranks it certainly isn't. Stopping this culture should be #1 on any governments agenda, so as far as the budget goes, it's a step in the right direction.
The politics really has to depend a lot on reality.
Just like a database: rubbish in, rubbish out.
I don't think benefits culture or not is the issue for me, the issue is true, open and accurate accountability.
(Try to find the sums received by your own or any local authority and the amount clawed back by central government).
True that there are issues regarding private landlords and registered social landlords but I think you may find that the revenues received by RSLs probably swamps the private sector in volume and amounts).
It is easier to find out where nuclear weapons are stored in the UK, biological weapon stores are, ... than it is to find out how rents collected from registered social landlords are collated and managed.
And as for how they are accounted for ... or the special bank accounts required in order to manage RSL housing stock ... or the routes that collected monies are hived off with little, no or obviously hidden accountability actually speaks volumes?
UK (un)civil servantry strikes again!
To be fair it is probably more of a Whitehall thing than a House of Commons thing and that is why Whitehall obfuscates to some several degrees over the matter.
