Bitterwallet's Budget Predictions
Happy Monday! You may not feel like celebrating, but if Wednesday turns out to be as wet as some people are predicting, you may need to get some smiles in while you still can. Wednesday is, of course, Budget day, and with growth figures falling way short of George’s predictions, some are suggesting he’s going to have to do something radical to pep up the country’s prospects.
One way to get the economy moving would be to put more money in people’s pockets, and even though the personal allowance has been increased over inflation, currently due to go up to £9,440 in April, some people are surmising that we may get £10,000 of income free of tax for 2013/14. This would, of course, be a coup for the LibDems, who have seen every other one of their policies fall by the wayside as the Tory Truck tramples through parliament. However, some people are not fans of this plan, with the TUC claiming that a reduction in VAT would help the poorest families more. They may have a point- if you already earn less than £9,440 (possible on a part-time, minimum wage job), the increase would do nothing for you, but reducing the cost of stuff you buy every day would help. Not that most people noticed when the VAT rate was cut a few years ago, meaning a 20% VAT rate is unlikely to fall.
The only other LibDem policy still kicking around is the Mansion Tax. Given that 88.6% of the Conservative Party are millionaires, living in properties worth over £1m*, things would have to be really bad for George to seriously consider implementing this one. Still, the wealthy have already been told they’re getting a tax cut (the 50% tax rate is due to fall to 45%), so perhaps they’d be glad to contribute a bit more to the social pot.
Another way to get more cash into people’s pockets would be to make sure they all had jobs, and the Government might think that extending the National Insurance holiday for certain employers creating new jobs would be a good move and would create new jobs. Alternatively, noticing that the self-employed pay less in National Insurance than their employed counterparts might instead result in an increase to class 2 and 4 contributions to level the playing field. After all, we’re all in it together.
Inheritance tax (IHT) is one of the most-hated taxes, not because everyone pays it (they don’t**) but because it is perceived as unfair, double-taxing income that has been collected over a lifetime. However, the Government recently increased the cap at which people would start having to pay for long-term care to £75,000, an expensive policy in times of little cash. It has already been announced that the nil rate band for IHT will be frozen, but more IHT tinkering may needed to foot the upcoming care bill.
Corporation tax has already been in the reduced aisle for some time, with further and faster reductions in the headline rate starting to take effect. This already puts the UK at the bargain bucket end of EU corporation tax rates, so a further reduction may be unlikely. Not that certain large corporations bother paying UK Corporation tax in any case.
Finally, fuel duty rises have already been postponed or scrapped, so an increase this week is unlikely. Campaigners have been bad-mouthing the beer tax escalator for some time, so the inflation-plus rise in duty may be deferred or disposed of altogether. Hot chicken tax is probably here to stay, however.
Still, all this is mere conjecture and George may do something wonderful and radical on Wednesday. We’ll just have to wait and see.
* 96.4% of all statistics are invented. Like this one.
** Official statistics show that IHT comprises just 1% of the UK tax take.