The news that the UK’s February borrowing figures were the worst on record did not exactly provide the Budget mood music the Chancellor was hoping for. Then again, the stark reminder that the UK is living well beyond its means serves to buttress his arguments about the need to control spending. There is no money to spend, and even with the current deficit-cutting fervour from Number 11 the UK remains at the whim of global bond markets.
So how did George do? The stamp-duty increase on homes worth more than £2 million is eminently sensible, but must be accompanied by the Chancellor’s promised “ton of bricks” on tax loopholes and avoidance. The Chancellor’s language in this area was actually quite encouraging, and it was nice to see the Government standing up against tax avoidance in such a strident way.
The increase in personal allowance is also welcome, although we’re now so close to reaching £10,000 that the Chancellor may as well have gone the whole hog today. It seems rather obvious, however, that drip-feeding this increase is a way of ensuring LibDem compliance with future Budgets….
Still, HMRC thinks that the change will take 840,000 people out of tax. This is wonderful, both in terms of keeping money in the pockets of those who need it most and because that’s 840,000 fewer people that HMRC need to process for income tax.
True, there’s no mansion tax, but it is actually a fairly unworkable proposition. I still think that taxation should focus more on wealth than on earnings, but it was unlikely that the Chancellor was going to flip the entire tax-code so I’m not too disappointed.
Then there’s the 50p rate. LibDems in the Commons this afternoon have avoided the subject, which is telling. Whether the grassroots are willing to forgive this as the price of coalition remains to be seen…
Overall? It wasn’t exactly a call to arms, despite the Chancellor’s claims about Britain striving more than other country to achieve prosperity. Then again, there is no silver bullet to cure the current malaise, as much as we hope to find one. Ultimately though, the Taxpayers’ Alliance doesn’t seem especially pleased, so we must be doing something right.
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* Ben Norman works on financial policy at Cicero Consulting