Author Archives: Joe Bourke

“Neither a borrower nor a lender be.” So says Lord Polonius to his son Laertes in Shakespeare’s Hamlet.

Good advice for young people starting out in life, but the modern economy of the 21st century depends on the constant circulation of money and credit. We all need to borrow to buy a house, for University etc. Firms need to borrow for investment in equipment and working capital. Government needs to borrow to finance infrastructure. That’s good borrowing.

If, however, debt is being racked up to buy imported tack or fund boozy nights out, we would think of that as bad borrowing.

There …

With the Liberal Democrats now committed to raising the annual tax personal allowance to £10,000, thoughts must turn to ways and means of following through on this pledge.

As I see it, there are three principal areas to be fleshed out.

1. Should the benefit of this proposed £700 per person tax reduction be extended across the board or restricted to the approximately 4 million taxpayers earning below the level of the minimum wage?
2. Should we seek to eliminate both tax and national insurance payments for the taxpayers earning below the level of the minimum wage?
3. In light of a continuing projected structural budget deficit of circa 80 to 90 billion per year, how is the cost of this tax measure best absorbed while simultaneously seeking both tax increases and spending cuts?

National insurance is now purely an additional tax. There is no insurance scheme in the accepted sense. Only around one-half of social security and health service costs are financed by national insurance contributions.

The pre-budget announcement that the party will pledge to raise the income tax personal allowance to £10,000 by closing tax loopholes exploited by big businesses and the wealthy has been well received by members and by the mainstream press.

The headline cut in income tax of £700 is based on the increase in the personal allowance from the current level of £6,435 to £10,000 at the basic rate of 20%. No mention however, has been made of increasing the national insurance threshold by a similar amount, to effectively take out minimum wage earners from the tax net altogether.

A single combined …