15.31. The PBR has just got underway, with Darling solemnly recounting Labour’s received wisdom on how the credit crunch started (nowt to do with us) and being barracked accordingly.
So what with the pre-announcements to the pre-budget report, is there any more to come? Will we see any surprises on top of the pre-announced changes to VAT, the higher rate of tax, vehicle excise duty and the continuance of the 10p rebate? My feeling is that we will. Liberal Democrats were miraculously let off by the Tories’ non-announcement about giving tax breaks to businesses who hired long-term unemployed workers provided they hadn’t made anyone redundant in the last three months and the moon is in the eighth house in conjunction with Saturn and there’s an R in the month. In a radical departure from history, not a bean of our policies was stolen. We can’t possibly be so lucky again. Can we?
15.43 A £20bn fiscal stimulus package – that lucky number. Steal number one. Doom-mongering about the State We’re In, to set up the House for the bad news on borrowing… £78bn in 2008, £118bn in 2009.
15.56. The VAT cut (on the standard rate only) will come in next Monday for 13 months, after which it will return to 17.5%. That’s £2.50 back for every hundred pounds of your Christmas shopping, you lucky little paupers. Say thankyou to Father Brown. (Oh, except on all your food shopping, of course, because food is already zero-rated.) One thing puzzles me – can they put the level back up under EU law? I thought European Directives meant we could only move our VAT rate towards the European consensual level of 15%, not away from it.
16.01. The tax package – yes, there were surprises (to me, anyway). Not something from the Liberal Democrat stable. The reduction of the tax-free personal allowance for earners on £100k-£140k, and it’s removal altogether for earners on over £140k. On the latter that will be an extra tax burden of £1,207 at 2008 levels (actually more, because the personal allowance will be larger next year) per earner, or a neat £100 per month. On the former £100k-140k group the extra burden will decrease down the earnings back to nil. How many of these earners are there? Taking Darling’s figure of the top 2% of the country, that’s 1,200,000 earners each contributing something up to £1,200. Taking the median figure of £600, that raises £720m. Not a massive haul. I wonder why they bothered with that? The higher rate raise to 45% and the half a percent on National Insurance will dwarf it.
16.11. This 0.5% on National Insurance. I smell another 10p fiasco. NI already hits lower earners disproportionately hard, with a current rate of 11% on your earnings between about £6,000 and about £40,000, and then 1% above that. What is this “offsetting” which will miraculously absolve those earning below £20,000 from being hit? Very over-complicated. Can anyone point me to the details of the offset so that I can rip it to shreds?