Thursday, 22 March 2012

Chancellor should have been braver

Full marks for the added stamp duty on expensive properties and removal of tax loopholes in relation to property ownership, but Osborne should have found some more money from somewhere to increase the personal tax allowance to £9000 this year rather than next, in order to boost the economy.

I see the reduction of the 50p top tax rate to 45p next year as no more than a gesture to the Tory "dries". Those people who resorted to tax avoidance measures are hardly likely to abandon them for a mere 10% cut in their top whack and the take from those who have been responsible all along will be reduced. Pay inflation, bringing more people into the higher band, should compensate for this last. However, it is hypocrisy for Labour to criticise the coalition's cut. For twelve out of their thirteen years, the Blair/Brown governments maintained Thatcher's top rate of 40% and their last chancellor's rate of 50%, which he emphasised was temporary, held for only 37 days. Osborne's 45% rate is fixed for this parliament.

As to the hoo-hah over the phasing out of the age-related earnings allowance, the Institute for Fiscal Studies reaction, just reported, is that it is a "modest" tax increase. More on that here.

Between the routine speeches from the pay-roll vote (on both sides of the chamber) there were some interesting contributions to the budget debate this afternoon. For instance, Peter Bottomley drew attention to a relaxation  of VAT as it applied to restoration of historic buildings, something which many of us have been advocating for some time. Clearly there is much in the small print still to be revealed.

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