Newsnet Main Articles
Wednesday, 21 March 2012 15:49
by a Newsnet reporter
Conservative Chancellor George Osborne has announced a cut of 5p in the 50p top rate of income tax, paid by those earning over £150,000 annually. The cut will come into effect next year. In a move the Chancellor says will benefit the low paid, the personal tax allowance will rise to £9,205 annually. Mr Osborne claimed his budget “rewards work and unashamedly backs business”.
Mr Osborne said the 50p rate had distorted the economy by encouraging tax avoidance, and cutting it to 45p would cost the exchequer £100m annually. He said: “[The top tax rate] raises at most a fraction of what we were told, and it may raise nothing at all.” Mr Osborne insisted that the rich would pay five times more tax as a result of all the measures in the Budget taken together.
The introduction of a tax cut for the wealthiest during times of austerity is bound to be controversial. The Chancellor attempted to neutralise the criticisms with the announcement of an increase on stamp duty on properties worth more than £2 million and a measure to levy a 15% tax on such properties bought through companies. Purchasing properties through companies has been a popular tax avoidance strategy by the wealthy. The chancellor promised “swift and retrospective” action would be taken if means of avoiding paying the new tax on property sales were to be found.
The Chancellor announced that corporation tax would be cut faster and more deeply than planned in a bid to get businesses to invest more and create extra jobs. The headline rate of corporate tax will fall from 26 per cent to 24 per cent from April – which is one percentage point more than expected. Future cuts will see the rate drop to 23 per cent in April 2013 and 22 per cent in April 2014.
However there was little in the Budget for the poorest in society. The Chancellor said that the Government’s next spending review “will have to confront” the issue of soaring welfare costs, and said the Government would need to make annual £10.5bn savings by 2016 in order to maintain the current rate of reductions in departmental spending fixed through the 2010 settlement.
Child benefit cuts will be phased in for those on more than £50,000. Only those earning more than £60,000 will lose child benefit entirely. The withdrawal of the benefit will be tapered for households where someone earns over £50,000, and will reduce by 1% for every £100 over that figure.
Mr Osborne announced a rise in tobacco tax by 5% above inflation, which will add 37p to a packet of 20 cigarettes. Motorists will also be hit, there will be a 3p rise in fuel duty, which will be implemented in August.
In another move to increase revenues, the Chancellor announced that he will phase out the higher income tax allowance which is currently enjoyed by around five million elderly people. From next year, people turning 65 will no longer automatically qualify for the higher personal tax allowance of £10,500 annually. The measure will affect the incomes of around half the pensioners in the UK and is expected to raise £3.3 billion for the Treasury over the next 5 years.
The tax raid on pensioners was condemned by organisations representing older people. Dot Gibson, general secretary of the National Pensioners’ Convention, said: “The decision to freeze the age related personal tax allowances effectively means around five million pensioner tax payers will no longer get additional reductions in their tax over the coming years – whilst those on the top rate of tax will see their bills reduced.
“Many older people will feel they are being asked to forego their reduction in tax to help out the super rich. There’s no fairness in that.”
The financial sector also expressed reservations about whether the Budget would boost the economy. Eimear Daly, FX Market Analyst at industry leading currency broker, Schneider Foreign Exchange believes that the Budget 2012 will not provide enough stimulus to the economy:
Ms Daly said: “The main message of the Budget was that austerity is still in the driving seat. A threat to the UK’s AAA credit rating has scared the Treasury into a budget that substitutes tax rises for levies and tax cuts for higher credits.
“Whoever the net benefactor of this budget, rich or poor, the UK economy will not be boosted by its measures. Budget 2012 is not the Budget for growth.”
Paul Kenny, general secretary of the GMB, said: “The different treatment of people at either end of the income scale is stark. Ordinary families are losing their tax credits and child allowances and suffering pay freezes while people on top salaries of £150,000 to £1 million a year are getting cash hand outs.”
Labour leader Ed Miliband said the budget was “unfair, out of touch, for the few not the many” and was based on the “wrong choices, wrong priorities, wrong values” from the “same old Tories”. He added, “Today marks the end of ‘we are all in it together’.”
Mr Miliband dismissed the increase on stamp duty for the most expensive homes, saying that most top earners would “totally unaffected” by it as only around 4,000 homes worth more than £2m are sold each year.
Speaking to the BBC, SNP Westminster leader Angus Robertson MP said: “There’s nothing new, but the overarching failure for me is on fairness … It’s literally back to the 80s. We see a Tory government which people in Scotland didn’t vote for cutting taxes for the rich.
“The UK govt is basically giving a tax cut to its supporters, the rich in society.”
Comments
2012-03-21 16:04
Danny Alexander wittered constantly in Cameron’s ear throughout the Chancellor’s statement, Cameron ignored him completely. Is Cameron deaf?
2012-03-21 16:18
2012-03-21 17:17
On a positive note the tax credits for the games industry is good news for Dundee. Credit where credit is due.
Yep,Dundee needs help.Very good news.
Unfortunately my home city back in Glasgow needs desperate help as well.
The Islands——all of them,Borders,Ed inburgh etc.,etc., the whole darn country needs resuscitation.
Chancellors Brown and Darling. Blair,Dougie Alexander,Lamon t,Baron McConnell et al were either in the party,or in power in London or Edinburgh,and they have the nerve to appear on the Telly critising the Tories,and I’m not a Tory!
That is Westminster ping pong politics.
My turn,your turn,my turn,and so it goes on.
Happy Families!
Unfortunately Scottish Labour and their UK HQ bosses have damaged Scotland and it’s families,indivi duals,our youth SO SO much in their 13 years it’s a tragedy.
2012-03-21 16:22
So now they’ve got an extra 5p they’ll pay all the taxes they’re supposed to? Does he think we’re daft? It is insulting if he thinks he’s doing nothing else but lining his own pocket.
And if giving more to the rich helps them to ‘do the right thing’ then how come taking money off the poor will make them work harder. Yet again, one rule for the rich and another for the rest of us joe-soaps
2012-03-21 16:31
Wonder who thought that slogan up?
So…. rich folk who can afford to pay clever accountants won’t be brought into line or face the force of the law, but old folk like my mum will continue to pay every penny they’re due, and more.
I would go to the Darkened Room if I wasn’t so cross.
2012-03-21 16:31
2012-03-21 16:40
Yes it’s a load of tosh, and frankly, if the people of Glasgow decide to believe in this and vote in a labour council once again, then they deserve everything they get.
All we can do is go about talking to friends, neighbours and work colleagues and try to persuade them to vote SNP – think positive action rather than negative rants at labour tactics- thats what I would do.
2012-03-21 18:35
I don’t know what percentage of total bus services that is. I also don’t know how much of a problem any of that will be. There are a number of timetable changes also announced.
First Bus’ website highlights changes to the “scheme which partly refunds some of the excise duty bus operators pay on fuel.”
So really the problem for the bus companies is the exceedingly high amount of fuel duty – that’s the London government tax burden.
Labour’s webpage suggests that councils would fund the bus companies’ costs. Would labour increase the council tax to fund this then ?
2012-03-21 22:29
Just off point but quite interesting. I noticed the party name on the poster was ‘Glasgow Labour’. An attempt to stop the rebels forming under that banner? bbc.co.uk/…/…
2012-03-21 16:41
2012-03-21 16:42
cdn.hm-treasury.gov.uk/…/
Proof the poorest are hit hardest by this budget!
2012-03-21 22:49
2012-03-21 19:44
Interesting that they effortlessly set the tone for the nation’s mindset.
2012-03-21 16:43
2012-03-21 16:45
What a surprise. Not many poors vote tory.
Actually, when you think of it, is there anything more stupid than not being rich and vote for them?
Are moneys expent on accountants to minor tax payments, going to be deductable too?
The only “good new” is pensioner making above 10,5 Thousands are going to have an extra reason to vote SNP and yes to Independence.
2012-03-21 17:02
O/T …… What on earth is all this about?
telegraph.co.uk/…/…
its not what was actually said he said more devolution for the islands! this is more a divide and rule tactic by westminister the paper are manipulating the facts shetland and orkney have been part of scotland since the 14 th centuary before the union so Westminster really have no clout to say otherwise also if it did happen that way then it open up cans of worms internationall! think about say dundee votes for independance but st. Andrews doesn’t does that mean st.Andrews in part of England or say leeds decides a referendum on joining Scotland and votes yes does that mean leeds is part of Scotland It’s a ridiculous and its a scaremongering tool by westminister also read the paper it doesn’t say what if shetland and orkney vote independance but Scotland doesn’t! tavish scott seems to suggest that if that happened shetland and orkney wouldn’t be allowed independance because Scotland didn’t vote for it but if Scotland voted independance there allowed to stay in the union! It’s hypocritical! but hey tavish Scott is just a typical britbrat! also the quote the islands are hostile to Scottish independance and rather be dictated by westminister than holyrood is a lie I’ve been in orkney recently and they are more for independance than anything they really don’t like westminister when they look at the price of petrol and don’t understand why a far away place dictates petrol prices that makes it dearer for them than in London when oil is closer to them!
2012-03-21 17:11
The amount of monies fifty pence in the pound tax regime takes in is irrelevant. To reduce this whilst the working class suffer cuts and pay freezes is immoral.
It is surely no longer possible for any self respecting Scot to consider voting no in a referendum on our countries future?
2012-03-21 17:13
That’s good to know, for future reference.
2012-03-21 19:50
2012-03-21 17:17
2012-03-21 19:36
Something to look forward to.
2012-03-21 17:32
Q: What kind of Chancellor takes from pensioners to give to millionaires?
A: A Tory Chancellor
Q: What kind of Chancellor wrecks the economy?
A: A Labour Chancellor
Q: What kind of Government controls Scotland’s oil and Wales’ water?
A: A London Government
Q: What is the solution?
A: Vote Yes for Independence
2012-03-21 18:04
Its a tory budget for tory supporters from a tory government.
Ok hands up anybody who still needs a reason not to vote for independence.
2012-03-21 18:08
In Blethering Bryan’s own words:
“So what was the fuss all about? Over the Scotland Bill, that is. From apocalyptic conflict, we have arrived at a late night deal to implement the provisions to enhance Holyrood’s powers, including tax powers.
Now his status is enhanced. He has secured the Bill with relatively few concessions – and none of the big ticket demands pressed by the Scottish Government such as the devolution of corporation tax.
He is entitled to feel quietly pleased with his endeavours and those of his team. Meanwhile, it is left to Willie Rennie, the Scottish Liberal Democrat leader, to lampoon the SNP approach to the Bill, to say that their demands simply crumpled under scrutiny.
2012-03-21 19:52
This is a very sad day. I’ve watched politics for long enough to know when there is something seriously amiss, and this is such a time.
No good at all will come from supporting this bill. The unionists and colonial general is being cheered as a hero in London.
Let me ask did the SNP really think people in Scotland would think accepting this tawdry bill as ok???
NOT what I voted SNP for. Not for one tiny second. Not at all.
Meanwhile all Westminster laughs long and hard.
What on earth planet are the SNP on?????
2012-03-21 19:59
2012-03-21 18:19
The red book also shows that they are taking an extra £1.135 Billion out of the North Sea. Bleeding us dry.
Freedom
2012-03-21 18:20
One thing that jumped out at me was his assertion that London will exploit North Sea oil and gas to the greatest extent they can, and also open up fields to the west of Shetland for exploration.
In other words, rip as much money from those assets as possible in the time left to do it.
We need that yes referendum now !
2012-03-21 21:43
It is definitely time to go. Vote YES
2012-03-21 18:23
2012-03-21 19:25
2012-03-21 19:47
2012-03-21 19:54
Well done, George, for sorting out this anomoly.
2012-03-21 20:46
The pensioners are funding the low interest rate on mortgages through near zero interest on our savings.
Then people turn around and say the increasing numbers of old people are a problem. For whom? Not labour or Tory Chancellors of the Exchequers.
2012-03-21 22:42
Then people turn around and say the increasing numbers of old people are a problem.
At least the budget means we can still drown our sorrows (and help to boost our whisky industry} without paying more. Make mine a double.
2012-03-21 23:13
2012-03-21 23:26
Just so long as you do not use your car to get to the pub and smoke a cigarette en route.
Use your car to go to the pub? Surely not.
I gave up cigs years ago as too expensive. I don’t even want to know what they cost now.
2012-03-21 23:29
2012-03-21 23:30
Of all age groups the over 65’s are the most likely to get out and vote at elections and punish politicians who short-change them and they will ensure that the Tory/LibDems will pay dearly for the error of their ways at their first opportunity at the ballot box
2012-03-22 01:05
The Tory/LibDem coalition have just had their 10p tax band moment with their freezing of the over 65’s tax free allowance – which is effectively a tax increase for over 65’s.
Of all age groups the over 65’s are the most likely to get out and vote at elections and punish politicians who short-change them and they will ensure that the Tory/LibDems will pay dearly for the error of their ways at their first opportunity at the ballot box
I guess they expect that the economy will be so much better by the next UK election, we’ll all have forgotten about it. I don’t suppose they care much about local elections or Scottish opinion.