Some fairly random thoughts on the budget.
* VAT up to 20%: excellent. Calculating 17.5% was always so tedious. Score: +1.
* Child benefit and public sector pay will be frozen - for no clear reason we (as in, our family) get child benefit, which seems silly. The Economist wanted to means test it, but that would be dull and employ yet more bean counters. Still, it might at least ensure that only those who need it bother to apply. Score: -1. Public sector pay: well, tough. I got no pay rise in 2008 and I didn't see anyone sympathising. Score: +1.
* Personal income tax allowance: To be increased by Â£1,000 in April to Â£7,475 - don't care. Score: 0.
* Capital Gains Tax: To rise from 18% to 28% from midnight for higher rate taxpayers - don't care; not planning on selling anything in the near future.
* Fags, Beer and Fuel: no increases. Wimps. Score: -1.
* Buying off the boys in Green: bad. Failure to scrap Trident ditto. Score: -2.
* Pensions: some action, looks sensible: +1.
* Bank levy: looks like small beer, but presumably a sop to the "soak the bankers" lobby. Score: +1.
* Environment: The government will "explore changes to the aviation tax system" such as switching from a per-passenger to a per-plane levy. It will consult on major changes. - ha, rubbish. Score: -1. Failure to introduce carbon tax: -1.
I'm sure there will be loads of arguing about "hitting the poorest hardest" but there are enough sops in there that he can bat that away fairly easily.
We are told that Mr Osborne said the state now accounted for "almost half" of all national income which was "completely unsustainable". and I find myself in agreement: the state is too large. This isn't just because I now work for the private sector: it is because I get more reactionary as I grow older, like everyone else.
Average real terms budget cuts of 25% over four years - except for health and international aid. - sounds fairly serious. I wonder how they are going to manage that and what will come of it. Still, it made the markets happy and the chance of us going the way of Greece is reduced.
Overall score: -2. Good, I wouldn't want to agree with a Tory budget, that would be a terrible thing.
Other stuff: football. Good to see the French being so stereotypically Gallic. Full marks. England seem to be on the way out, which will do no harm.
[Update: I forgot to mention my top tip for saving money: abolish Ofsted -W]
How horrible - they make life difficult for people and then don't increase Fags, Beer and Fuel, as they believe these are the only comforts of the little people...
If you look at the share of national income taken up by government in first world countries (including health and pensions) it ranges between 40 and 50%. That's the cost of civilization.
Osborn is playing you for a sucker.
Fags, Beer & Fuel... will get hit by VAT...
Must admit I couldn't work out what the "emergency" budget did, since most changes are postponed.
Putting VAT up 3 months before revised tax codes seems a bit shortsighted though.
Erm, we had a Darling budget earlier in the year and, as far as I'm aware, his hikes are already law, when ...
Other alcohol duty rates [other than the 10% on cider] will increase by 2 per cent above inflation as announced at Budget 2008. In addition, all alcohol duty rates will increase by 2 per cent above inflation for two further years, until 2014-15.
[t]obacco duty rates will increase by 1 per cent above inflation from today and by 2 per cent above inflation for the next four years.
Darling's hike in cider duty to 10% is to be repealed in Osborne's budget (starting in July), presumably rising in line with other alcohol duties instead.
Oh, and one other point. It's not a Tory budget, it's a coalition government budget. I think if it had been a Tory budget we may have had something more akin to the (in)famous Howe 1981 austerity budget.
[Yes, fair point. The Tories were indeed very careful to make sure the blame was psread around and Labour were particularly vindictive in trying to blame it all on the Lib Dems. I'd say that without a coalition the budget would have been weaker -W]
Public sector pay: well, tough. I got no pay rise in 2008 and I didn't see anyone sympathising.
With respect, and allowing for the fact that the pay freeze is for those earning over Â£21k, I think someone on Â£21.1k will suffer far more from a lack of a pay rise (added to the increase in VAT) than you.
And just because you didn't get a pay rise in 2008 (what about 2009, or 2007, or this year ?), shouldn't mean you have to be inconsiderate about someone else not getting one. I sympathise with you not getting a pay rise in 2008 (I didn't get one in 2009) and wouldn't wish it on anyone.
My understading is that the administration of means testing of many benefit streams would cost more than it would save. Dunno how true that is though.
This may not be the final settlement.It could be a tactic for pressurising the wets , (which Thatcherite term may or may not include the Lib Dems)into tearing down more pre-election promises. The discussions about the budget and the Autumn spending announcements are being confused in order to soften the impact of the latter.
According to Newsnight the Thatcher Governments did not really cut government expenditure. If that is true your reservation about the 25% is an understatement. The Greek comparison is highly non-rigorous, probably alarmist, shock-therapy. It has also been inflated recently to add credibilty to the idea that things are now much worse * than before the election.
Money undergoes a slow phase transition with magnitude. Eventually for the super-rich it becomes detached from its original function. Its a different substance; its free. So Cameron's "we are all in it together" is meaningless. Your remark about 20% VAT being convenient, shows that this might hold further down the scale.
I have not followed the Housing Benefit cuts. Of course some free marketeers will claim that such cuts will bring down rents. But the net effect might be more homelessness.
* They have got worse in the opposite sense that a coherent cut across Europe, now looks more likely and Osborne will be joining it. This could be much more severe than a set of out of phase cuts.
Overall score: -5 for budget; -20 for the 25% threat.
P.S. I thought I heard some Lib Dem woman argue this morning that her constituents found it too easy to live off hire purchase (borrowing) and this would help to cure them of the habit. She was not contradicted!
You realise that VAT is a regressive tax, don't you? Even with the UK's anomalous zero rating of books, children's clothes, some food, etc, this places a heavy burden on the poor.
[Yeees. Please don't take the "20% is more convenient to calculate" comment too seriously -W]
It's instructive to read this pre-budget Guardian piece on VAT; I think so anyway.
"Oh, and one other point. It's not a Tory budget, it's a coalition government budget. I think if it had been a Tory budget we may have had something more akin to the (in)famous Howe 1981 austerity budget."
According to Obsolete, the BBC reckoned the LibDem difference to the budget to be about 3%. I didn't see the broadcast, so (a) don't know if that's the case, and (b) don't know if they got it right.
I think carbon tax is not needed anymore. The global Ponzi economy is collapsing quite rapidly (nobody noticed?). This time, the bubble fuelled by cheap fossils and created by greed and cheap credit is much bigger than the bubble collapse of which led to WW2. Unortunately the debt is much higher and systematic risk in the ecnonomy is enormous so I do not think we will get smootly through this financial mess and downfall... peak oil and climate change will not make it easier in any case... in few years nobody is really interested in climate change, I think.
That Guardian piece contains the most thrilling bit of apologetics for regressive taxation. While it absolutely hammers the poor on income, it's harshest on the well off for spending. Translated into English: if you're comfortably off but not rich, you'll be hammered with sales tax on your new car, petrol, phone bill, but if you're in a high enough income to be saving income or diverting expenditure in a way that minimizes tax liability, you'll feel a lot less of the sting. But if you're in the lowest income bracket, even the zero rating of some items will not stop you feeling the biggest hit to your already limited spending power.
In macroeconomic terms it's also bad news because it deters spending across the board, though I hope the treasury models have taken the hit to the economy into account compared to other means of raising the money. On this we can only trust that they know what they're doing.
Tony Sidaway says:
we can only trust that they know what they're doing.
Can you take this on trust?
It is predicting that, as public spending falls, private consumption and investment will rise rapidly to replace it