Osbornes budget

[scottycelt]

That's the lowest pensioner grade at which they get the £10,500 tax free allowance. Wealthier pensioners don't have the same benefit.There is no stipulated end. If this government (or an extension of it) reneges on the guarantee, that would provide legitimate grounds for objection. One might also note that the very poorest pensioners in terms of income are already not paying any tax and won't be in spite of the allowance freeze.

If this government (or an extension of it) were to renege on the guarantee, it would be legitimate to make a fuss. In the meantime, pensioners are guaranteed an increase in BSP of at least 2.5%, even if average earnings and CPI are low.

I'm not sure at what level making a 'a fuss' may be considered 'legitimate', and who decides when the unacceptable state of illegitimacy has actually been reached ...

The argument here seems to be that because pensioners were given something of a boost in the last budget the Government can now fairly claw back some of it in this one. A BBC commentator said much this same on television this morning, suggesting that pensioners have done quite well from the budget, 'this year, in the round'. On the contrary they stick out like a sore thumb in doing particularly badly in this year's budget round!

It then became clear he was including the benefits pensioners were promised last year, and which will soon take effect. So, presumably, now the Chancellor has given a significant boost to standard personal allowances this time, he can fairly claw some of it back in 2013? That appears to be the logic applied to lower-paid pensioners in the current 'round'!

The extra age-related personal allowance for pensioners is effectively being abolished. That is the simple truth and any 'simplification' and 'fair' excuse is unconvincing to say the least.

[Dave2002]

Surely in this context what matters is whether the factory wouldn't have been built without the measures in the Budget? Unless we've dispensed with goalposts altogether?

I wonder if this, and the various schemes around different tax rates are actually the result of some high level bargaining, which we as mere "muppets" aren't party to.

I don't know if Sweden has changed significantly in the last decade, but there were certainly quite a lot of employees of Eriksson apparently working out of Brussels or other places in Belgium. Seemingly they were paying tax in Belgium, which is I'm sure lower than the tax in Sweden, but at least rumour has it that many of them never set foot outsde the country (Sweden). You might wonder how that could happen, but again, Eriksson is one of the few big employers in Sweden, and it could be that they called the shots, and told the government that either they would operate this way, or pull out of Sweden altogether. Probably this couldn't happen in the UK because there are more fairly large companies, but none really big enough to totally dictate what happens, but maybe some of the big ones can indeed exert very strong influence. Maybe something like that did happen with the 50-45p business here, and changes in other taxes that affect businesses, but I don't suppose we'll ever know.

Other ways round the "problem" would have been to leave the taxes unchanged, but offer incentives for companies to build factories - that's been done before, though I'm not sure that such regional development fixes are currently fashionable.

[Lateralthinking1]

I'm not sure where the 'very considerable' quote came from, nor whether it means the difference in terms of direct revenue from the 45p would be 'very considerable'. I assume it doesn't. But if it was brought in as a 'temporary measure' (which is was) and seems clearly not to have achieved anything like its aim, then reducing that level of tax can be offset by introducing new taxes, with the overall difference (including less avoidance on the 45p tax) which could be significant.

He has dismissed the extra revenue raised from 50% as, quote, "negligible". The "very considerable" is not a direct quote. It is a summary of his position. His actual quote was:

"No chancellor can justify a tax rate that damages our economy and raises next to nothing. It is as simple as that."

So in other words, he is heavily implying that 45% would make a very considerable contribution towards both saving the economy from being damaged and raising more revenue. Why else do it? In fact, I think he said "up to five times more revenue". That is very considerable but only if it is anywhere near to the truth which I doubt.

[french frank]

The extra age-related personal allowance for pensioners is effectively being abolished. That is the simple truth and any 'simplification' and 'fair' excuse is unconvincing to say the least.

That is the simple truth. But what percentage of pensioners over the age of 65 would you say will be affected by the 'freeze'? At a guess?

[teamsaint]

since the 50p rate was raising so little revenue, it makes you wonder why the rich folks wanted rid of it, really.

As for this despicable spin/PR/lies about a massive investment by a big drugs company, well the people at the top really DO think we are stupid.

[Lateralthinking1]

since the 50p rate was raising so little revenue, it makes you wonder why the rich folks wanted rid of it, really.

There is the seriousness test. Do you:

(a) Ensure that Cameron bangs his fist on the table in Brussels furiously demanding that Luxembourg plays fair on tax havens while sending a warship with Prince William on board to rest just off the British Virgin Islands until they too agree to change

or

(b) Reduce the tax rate from 50% to 45% with some vague peculiar notion that it will scare the hell out of the morally elusive and trigger identifiable human action?

If I was loaded, I'd be quaking in my boots at (b).

[John Skelton]

He said that “the Budget reaffirms our unwavering commitment to deal with Britain’s record debts”. Yet the current and prospective level of public debt is far from being a record: it is below the country’s long-term average ratio of debt to GDP. The chancellor also added that “there have been times that the Treasury has been borrowing money more cheaply than at any previous times”. Yet, despite confronting extremely low borrowing costs, modest debt levels and a depressed economy, the government is unwilling to borrow more than it plans, even to expand investment. Instead, it is proposing wheezes to obtain far more expensive funding, in order to build the infrastructure the country needs. The latest absurdity is the road leasing scheme – a boon for bankers and bidders, but surely for nobody else.

... the cuts in corporation tax, to be lowered to 24 per cent, with the aim of cutting it to 20 per cent. Zero-sum competition among governments to attract mobile headquarters cannot make sense. Nor is there any reason to suppose the fiscal and economic benefits will be large. Meanwhile, the reduction in corporate tax will encourage retentions over distributions, while doing nothing to raise investment. A far more sensible proposal would be to increase investment incentives and maintain – or even raise – headline rates. The broad aim would be to make the system neutral between retentions and distributions while encouraging investment, which is extraordinarily low. Moreover, the OBR has also sharply cut its forecasts for business investment for this year and next.

Again, supporters will be pleased by the cut in the top tax rate to 45 per cent. The arguments, on both sides, are much weaker than supposed. This will neither save the economy nor destroy fairness. But the benefits to high earners could be substantial: £50,000 to someone earning just over £1m. If austerity seems grossly unfair, the politics will be poisoned.

It is high time, moreover, that the ridiculous notion that raising the income tax threshold benefits the poor was ended. Such a focus on the impact of the rise in the personal allowance is also appropriate: at £3.32bn in 2013-14, this is far and away the biggest item in the Budget, though it is partially offset by cuts in age-related allowances. The benefits of higher personal allowances go to those above the new thresholds, not in receipt of tax credits. This also benefits double-earner households twice as much as single-earner ones. It is no surprise that the proportionate hit on net income from measures taken by this government is least for those in the third, fourth and fifth deciles from the top – the upper middle, not poor.

Martin Wolf in the FT.

http://www.ft.com/cms/s/0/207ef586-71e5-11e1-90b5-00144feab49a.html#axzz1pmJXKi2k

[french frank]

Well, that's the Dismal Science for you. It doesn't matter what you do, some expert will come along and say it's completely the wrong thing to do ...

[Eine Alpensinfonie]

That is the simple truth. But what percentage of pensioners over the age of 65 would you say will be affected by the 'freeze'? At a guess?

That is a politician's question. If you are one of those affected, the answer is "100%". For the rest, it is merely a statistic.

[Eine Alpensinfonie]

In a way that's right. But there was a far higher chance that Maxwell would go bust and lose all his pensioners' savings than that a government would.

Then why is Cameron telling civil servants, teachers and nurses that the ir pensions are "unsustainable" despite not having provided one shred of evidence to back up this claim.

[teamsaint]

don't listen to what they say, look at what they do.

What they do is privatise the health service, cut tax for the very rich, and spend what public money is left on guns.

[teamsaint]

That is a politician's question. If you are one of those affected, the answer is "100%". For the rest, it is merely a statistic.

well quite.
Personally, I have always felt that the age tax allowance was a complex anomoly, (I should know, I used to have to implement it and explain it to bewildered tax payers !!)

For all that, its certainly going to hit some pensioners on modest means pretty hard, unless a real, actual, tangible increase in the state pension is made...........yeah right.

Anyway, count your blessings if you are on the wonderful state pension, before intergenerational war breaks out. For people of my age , the state pension is just like the home leave in catch 22.........the number of missions always goes up just before leave time !!

(waits with tin hat on............)

[Flosshilde]

I feel rather sorry for FF, having to defend the indefensible. She's in rather a similar position supporting LibDem priciples as Scotty is on the question of God.

[french frank]

Then why is Cameron telling civil servants, teachers and nurses that the ir pensions are "unsustainable" despite not having provided one shred of evidence to back up this claim.

All pensions are in some sense 'unsustainable' because we're all living longer on average. There's plenty of evidence for that. That's why the pension age is having to rise. The financial implications of supporting a pensioner for 20 years (65 to 85, say) - or more - are significantly different from supporting a pensioner for 10 years (from 65 to 75). Actuarial calculations which once looked safe no longer are.

That is a politician's question. If you are one of those affected, the answer is "100%". For the rest, it is merely a statistic.

True. But the newspaper headlines about 'granny raids' is partly propaganda since there have been very substantial hikes in the personal allowance and the aim is simply to end with the same amount for workers and pensioners alike. It isn't the amount that is the question: it's the loss of the differential for pensioners. If the increases in the age-related allowances had been more modest, and for those still in work more substantial in order to achieve parity, no one would be commenting. But because we were given lots of jam yesterday we moan when the jar's empty.

The priority (in my view) would not be to preserve that differential for those with incomes between £10,500 and £24,000 (£29,000 if you count the pro rata reduced allowance) but to raise the basic state pension substantially to help the 50% of pensioners who don't benefit at all from the personal allowance because their income is too low (you can't give tax breaks to people who don't pay tax).

[scottycelt]

That is the simple truth. But what percentage of pensioners over the age of 65 would you say will be affected by the 'freeze'? At a guess?

Well, all of those who qualify (or would have qualified) and quite naturally expected the extra age-related allowance to continue ... so 100%, at a guess ... those who don't (or wouldn't) qualify anyway because of higher earnings are irrelevant to the point, surely.

If all personal allowances were frozen for a year or two this would be considered as a tax hike in real terms, so it's no different for those pensioners affected?

Anyway, it's done now and the Government is already insisting there will be no 'amendment', so if it is true to its word, that's that!