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Thursday, March 22, 2007

The smiling Chancellor

There were a lot of smiling Labour AMs in the Assembly yesterday. Many were looking forward to getting back to their constituencies so as to try and sell Gordon Brown's 'tax-cutting' budget. I suspect however that once they look at the budget in the cold light of day then like the rest of us they will be wondering what exactly it is they have to sell.

This morning's Guardian sums it up, effectively what the Chancellor has done is to double the bottom rate of income tax. Not so much a tax cut as a sleight of hand that will marginally benefit those earning between £15,000 and £42,000 at the expense of the poor. Let the experts explain:

From April 2008 the 22% rate will be cut to 20% but the 10% band will be swept away. In simple terms, all basic-rate taxpayers will be worse off by £223 a year from the loss of the 10% tax band but will start gaining from the cut in basic rate to 20%, depending on how much they earn. In the same year, national insurance rates will also be adjusted, which could mean some losses for middle-income earners.

But in the hours after the speech, accountancy firms crunching the numbers came out with differing scenarios as to who may be the winners and losers.

BDO Stoy Hayward said that on an income tax-only basis (excluding tax credits) a single person earning £15,000 a year would be £23 worse off a year, while someone earning £30,000 would be £278 a year better off. But because of moves to align national insurance with income tax bands, earners in the £38,000-£42,000 bracket will see little or no tax benefits from yesterday's cuts.

Ronnie McCombe, a KPMG partner, said: "What the chancellor has done here is a classic case of smoke and mirrors. The 2% reduction in income tax will seem like great news to everyone but the much less prominently publicised increases in national insurance and the abolition of the 10% starting-rate band will in many cases offset the savings."

The Chancellor seems to be relying on tax credits to make up the difference for low earners but anybody who has any dealings with this system will know that it is largely unworkable. It is mired in a huge bureaucracy in which thousands of civil servants seem to spend all their time chasing over-payments caused by the sheer complexity of the system.

What those Labour AMs have left to sell is a huge smoke and mirrors con-trick based around an easy headline tax-cut. However, when people start to look into it in more detail they may have some very difficult questions to ask Labour Party canvassers.
Speaking of our smiling chancellor and his almost Tory style tax cut (BTW is there really a difference between Maggie Thatcher and the current regime?) I don’t think so.
There was a good letter in today’s Echo from a lone parent living my part of Cardiff.
Where is the justice in this?

I am a single parent working for a large retail company. After I have paid rent and council tax I am left with £59 a week to pay all other bills, £2 more than I would get on Jobseekers allowance. If they want single parents to return to work, who is going to work for just £2 and end up in a position like I am? I am working all hours to no avail. I have the worst house in my area, as everyone else is in receipt of benefits or claiming illegally. Where is the justice for hardworking lone parents?

Having myself worked for a large retail company (probably the same one) know damn well that even with tax credits that we are still locked into poverty working at poverty wages for large companies that make billions in profits.
To most people (especially the writer above) slogans like “Vote Plaid gets Tory” mean nothing, because whoever wins they will always be losers.

When we get back to the old Thomist doctrine of a “Just Wage” then people will wake from their apathy. Until then! It’s all “bullshit”!

Even the correspondent you quote seems not to believe in a 'Just Wage' - they appear to have a problem with other people having better than the worst and being on benefits.

Still. You could always contact this person through the Western Mail and offer some of your money to them.


Oh, you want to offer some of my money too? Well, I'll think about it, but I might have other priorities that you don't know anything about. Mightn't I?

In the meantime, you know where the phone is, you can make and individual difference, right now.

Go on.
Web master.

No I don't want your money, and she probably don't want your money, or mine.

I know what is like since I had worked for a large grocery chain. 2% cut in taxes means nothing when you think of the increases in council tax or VAT or National Inssurance contributions.

Peter Black is right it does not benefit the low paid. You can make real difference Web Meister! You can say is it fair for a corporate CEO to be given a 25% paY rise?
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