Tuesday, 22 June 2010

Initial Thoughts on the Budget

So, George Osborne has delivered his Budget. I am not impressed.
Mostly I am just profoundly grateful that I'm not disabled, or on a low income, or trying to get back into work.
We're told savings must be made, but they seem primarily to be targetting the least well off:

-child benefit frozen. This will make no differnence to mid-to high income familes, but will hurt poorer ones.
- VAT increased from 17.5% to 20%. This will affect everyone, but again, the impact will hit those on lower income a lot harder. If you have to budget to the last penny, even an extra £5 a week makes a hell of a difference.
-Sure Start & Pregnancy grants cut. This is a really great one, let's pick on children in poverty. It's their own fault for chosing to be born to poor people. Besides, if we help them to a decent start in life they might grow up expecting equality of opportunity and who knows what else!
- CGT raised from 18% to 28% for higher rate tax payers. No change to the allowances. So you can still have £10,000 of unearned gains every year without paying tax on it. I can't help feeling that bringing the limits and levels of tax closer to those for earned income would be fairer.
- tax relief on pension contributions remains. So if you are a basic rate tax payer every £100 you pay into a pension is worth £125, but if you're a higher rate payer it's worth £140.
-and of course, MPs get to keep their tax free travel allowances. (that's right. they get paid their costs of travelling to work, and unlike everyone else in the entire country, that's not a taxable benefit) Is this what they meant when they said "we're all in this together"? Of course, the tax they'd pay, if they paid it, would be a drop in the ocean, but it does seem pretty hypocritical.

There are a few bright spots. The increase in the basic income tax allowance will help lower earners. there is some small protection for the lowest paid public sector workers (But not, presumably for all the people who now work in the public sector but for contracted out companies). The state pension rises will go some way to offset the VAT rise.

On a purely personal level, I suppose I should be pleased. As far as I can tell, the only thing which will have a negative effect on me personally is the VAT rise (but there is no VAT on books or food, so the *true* essentials are OK! But it seems unjust.