Brown’s Five Year Plan, sorry, Budget
It must be something in the spring air. After 99 individual tax increases, a dramatic twist at the end of Gordon Brown’s final budget revealed a cut in the basic rate of income tax from 22 to 20p. It was accompanied by a crescendo of cheers from Labour MPs, waving their order papers at a stunned Tory front bench. This is a delicious political move. It’s a cut that the Conservatives would never get away with, at least if Labour had anything to do with it. In addition, the Chancellor also pledged to increase the higher rate threshold to from 40 to £43,000, although this is offset by abolishing the lower rate of 10% and the associated changes in national insurance contributions. Overall though, income tax will be simpler a year from now than it is at the moment.
Aside from simplification, another area where the Chancellor has accepted what the Conservatives have been saying for while, is on Corporation tax. The Chancellor has promised a cut of 2p in the rate of corporate tax, although it’s not quite the 3p George Osborne would have liked. And talk about giving with one hand and taking with the other, taxes on small companies will increase from 20p to 22p in 2009.
Overall, the Iron Chancellor’s last budget is far from boring, not that his previous budgets offer much in the way of competition. As one City analyst put it, with over 50 alterations there’s an awful lot in there. However, overall, it works out neutral. It means that the exchequer will give away about half a billion pounds extra over the coming year, but will gain a bit more back over the next three years.
Finally, as the Chancellor kept repeating, he has kept to his “golden rule”. Though this met with jeers from the Tory benches, as it was only the Chancellor’s handy work with the definition of the economic cycle, to include Conservative figures, that has allowed him to meet it.
21/03/2007 at 16:20 |
There are some controversial moves in there, specifically the removal of the lower rate of taxation. This will surely hit Labour’s grassroots followers the hardest; doubling taxation on those working part time or in unskilled jobs. Whilst passing on the benefits to the middle income middle classess. Perhaps such moves indicate Brown is considering an earlier election than some might have previously anticipated.
21/03/2007 at 18:14 |
Seems like both parties are ignoring their core votes.
21/03/2007 at 18:34 |
They’re probably banking on their core votes having nowhere else to go
21/03/2007 at 18:47 |
That is a good point Daniel, although the Tories have been out of power for so long even the right wingers will do anything to get rid of labour!
However, the left wing of the labour party could arguably be pretty keen to get rid new labour too as well now!
Or perhaps it could cause a backlash from labour members and trade unions when the leadership contest happens, could certainly boost mcdonnell or meachers chances??
22/03/2007 at 01:58 |
‘the prime minister giveth, and the prime minister taketh away’ (from yes minister)
in this case its the prime minister prime………. (for those doing maths)
cameron made the point that he usually does giveaways (or perceived ones) before general elections. a few voices reckon he is…for a snap election. i doubt it personally, but its an interesting hypothesis.
22/03/2007 at 11:03 |
I’d be surprised if he had the guts