Thursday 22 March 2012

George Osborne - Friend of the Rich

A few comments on George Osborne’s latest budget.  Nothing earth shattering in the various measures.  Once again it confirms the age old priorities of this nasty Tory led Coalition.  At any and every opportunity favour the richest and punish the poorest.  While raising the personal tax threshold is very good news for those who pay tax, it does nothing for the poorest of all - the unemployed and those on very low incomes.  Not to mention the none too subtle stealth tax on pensioners.  At the other end of the scale come the real goodies - the lowering of the 50% tax rate to 45% and the reductions in corporation tax.
Both send a clear message for the future - the UK is on its way to becoming a low tax country.  Now this is all well and good if you earn enough or are otherwise rich enough to pay privately for education, health, care etc.  Unfortunately the vast majority of us cannot afford to pay for this out of our limited incomes.  We rely on good quality public services.  And of course the corollary of low taxes is less and less money for these public services.  Which is exactly what our nasty Tory led Coalition wants.  Favour the rich and let the poor sink or swim.
The measures themselves do not make much sense otherwise.  It is not all clear just what the planned reduction in corporation tax to 22% is supposed to achieve, other than making shareholders even richer.  It is worth noting in this context that small companies or at least companies that make less than £300,000 profit per year only pay 20% tax at the moment and this is not planned to change.  So the reductions will only benefit the biggest companies.   And at 22% it is still some 10 points higher than the Republic of Ireland, so it is unlikely to stop any company moving to Dublin.  While in France and Germany corporation tax or its equivalent is much higher and yet both countries have outperformed the UK over recent years if not decades.  Most significantly in terms of industry and manufacturing.  If George Osborne is really determined to rebalance the UK economy (which would be a good thing) then investment in education and infrastructure such as transport is likely to do much more in attracting home grown and inward investment.  But where is the money to come from to pay for this if he cuts corporation tax?
It is even worse with regards to the decision to reduce the 50% tax rate to 45%.  Remember this rate is only paid on income that is above £150,000 per year.  Which is something like five times the average salary.  And many more times above what most people earn.  Yet we are told that this group of very rich people are so averse to paying their dues that they will go to any lengths to avoid paying tax.  It is claimed that the 50% rate will only bring in £1million as opposed to the £3million estimated.  Now I would have thought that the correct response in this case would be to redouble or triple the efforts to catch tax avoiders, while also noting that £1million is still, well £1million.  If the prospect of paying extra tax is so frightening to our very rich citizens, and remember this is only an extra 10% as they are already taxed at 40% on most of their income, then a mere reduction to 5% is unlikely to lead to any change in behaviour.  The reality is George Osborne’s very rich chums don’t want to pay tax even at 40%.
What these measure demonstrate beyond any doubt is that for our nasty Tory led Coalition the notion that we are all in this together has disappeared for good.  Tax cuts for millionaires and nothing for the poorest.  Sums up the Tories.  Just what the LidDems are doing propping up this vicious nonsense, who knows?  Do they?

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