What have the Libdems got out of this Budget?

[Wildcat]

But it is not ignorance, it is a well balanced way of thinking, if you read his explanatory post 26

 

The problem is, from that post anyone would think that VAT was all that happened in the budget.

 

The budget is a disaster not because of the tinkering around with taxation, although in the case of increasing the ability to avoid CGT and Corporation Tax these are bad enough. It is the focus on cutting back on services to pay our way out of recession. The 80\20 split of cuts to taxation firmly makes this budget an attack on the poor and the vulnerable in society that rely on public services that will be cut. There is no economic sense to what they have done or are planning. It is an ideological attack on ther poor for the benefit of the rich.

[andyofborg]

 

The budget is a disaster not because of the tinkering around with taxation, although in the case of increasing the ability to avoid CGT and Corporation Tax these are bad enough. It is the focus on cutting back on services to pay our way out of recession. The 80\20 split of cuts to taxation firmly makes this budget an attack on the poor and the vulnerable in society that rely on public services that will be cut. There is no economic sense to what they have done or are planning. It is an ideological attack on ther poor for the benefit of the rich.

 

how do we pay for these services though?

 

taxation? that's going to hit the poor

borrowing? that's fine until we reach the point when no one will lend us money any more

 

an alternative view, which does explain that there is some sense is here

 

http://www.theregister.co.uk/2010/06/22/budget/

 

it makes interesting reading.

[Guest sibon]

Thanks for the reply. Very illuminating.

 

i'm a pragmatic, mostly left of centre, but sometimes slightly right on some things sort of a guy, so the lib dems is the party for me

 

I'm a bit like that, so I see Labour as the party for me.

 

Even so, I stood in the polling booth mentally flipping a coin between Labour and Lib Dem this time. I think I made the correct call, despite the mess that Labour have made of things. A lot of the financial trouble is a result of global factors. I'm pretty confident that Labour would have got us out of the hole.

 

i think we have to acknowledge that the key thing we need is a stable government and, whether we like it or not, the general election result allowed only the coalition as an option. some policies have had to be sacrificed in order to form the coalition and while i may not like it, i can live with it. if the coalition is a success, then it will have been worth it and i'm prepared to wait and judge their overall performance rather than dissect each individual action.

 

 

I don't see the coalition as stable. It is already under attack from the Tory right and the Liberal left. That is a huge problem. I agree with you, the last thing that we need is another change of Government in the near future. I fear that we will have one though.

[andyofborg]

I'm a bit like that, so I see Labour as the party for me.

 

each to his own

 

Even so, I stood in the polling booth mentally flipping a coin between Labour and Lib Dem this time. I think I made the correct call, despite the mess that Labour have made of things. A lot of the financial trouble is a result of global factors. I'm pretty confident that Labour would have got us out of the hole.

 

I live in labour's safest yorkshire seat, so it probably doesn't matter who I vote for, though I must admit I would have had a little smile if Mr Blunkett had joined wacky jacquie on the the list of ex home secretary ex mp's.

 

With a bit of luck they they probably would have sorted the mess out, their "keynsian market stimulus in bad times" strategy was a good thing, its just a shame they didn't follow the "keynsian pay off debt and put money away in the good times" part of the strategy. Ultimately, this is where they failed, though they did apparantly abolish boom and bust. I also think that had labour won with a workable majority, then gordon brown would have found himself surrounded by people more concerned with being his successor than anything else, a bit like john major did in his final term.

 

I don't see the coalition as stable. It is already under attack from the Tory right and the Liberal left. That is a huge problem. I agree with you, the last thing that we need is another change of Government in the near future. I fear that we will have one though.

 

Your right that the extreme edges of both parties might cause a problem, but there should be enough in the centre to see them off. Things are picking up and if things are noticably better in about 18 months or so then many of the critics will have been silenced. As irritated as they are, they can't really challenge the leadership as that would dissolve the coalition and result in a speedy general election and I don't know who would win. I haven't seen a poll recently but my guess would be either about the same result or possibly a small working majority for one or other of the parties. A big risk for those at the edges to take.

 

I also think that a minority conservative administration would have been hostage to the right of the party. the coalition should allow cameron to marginalise them sufficiently so that while they squeal they can't cause more serious problems.

[TeaFan]

So if disposable income averages 12.5k per annum and the VAT increase will cost the average family £250 and the Chancellor has increased the personal tax allowance by £1000 (thus saving a basic-rate taxpayer £200) then the net difference - the massive burden imposed on the average family by the amazingly unfair VAT increase - is £50.

 

Less than £1 a week.

 

Those families who earn less than average will have a lower than average disposable income and will thus spend less on VAT. They will get the same tax allowance as everybody else, so the 'huge' VAT increase will hurt them less.

 

If you don't want to pay VAT, think about what you buy. Do you really need the latest mobile/an I-Pad/ a new 42" TV/ a new car?

 

If you want one of those things, go and buy it - but be prepared to pay the tax on it.

 

The Child Poverty Action Group calculate that the poorest families spend 14% of their income in VAT, whereas the richest spend 5% of their income in VAT. Which makes an across the board increase in VAT a tax predominantly on the poor, surely?

[Wildcat]

how do we pay for these services though?

 

taxation? that's going to hit the poor

borrowing? that's fine until we reach the point when no one will lend us money any more

 

an alternative view, which does explain that there is some sense is here

 

http://www.theregister.co.uk/2010/06/22/budget/

 

it makes interesting reading.

 

A few points immediately jump out.

 

VAT is regressive so raising that and not income tax disproportionately affects the poor.

 

The 80\20 split of cuts to tax rises hits the poor hardest.

 

No where does the article factor in the 25% cuts in public sector budgets. Budgets again relied upon by the most vulnerable in society.

 

There is also no need to be making this level of cuts, in fact making a million or so people redundant that rely on the Govt.s expenditure whilst we are tiptoeing out of a recession is madness.

 

Describing the bank levy as some sort of insurance scheme is bizarre. I am not aware of any insurance schemes you simply buy with a one off payment, nor do I see the sense in it when at the heart of the countries problem is the lack of funds for banks lending. This is precisely the sort of measure that will prolong the recession, and it penalises all banks equally regardless of their contribution to the crisis. A much more sensible option and something more like an insurance scheme would be a transaction tax like other countries have been implementing. That would be a much more sensible way to deal with any structural problems.

[Wildcat]

I don't see the coalition as stable. It is already under attack from the Tory right and the Liberal left. That is a huge problem. I agree with you, the last thing that we need is another change of Government in the near future. I fear that we will have one though.

 

I think the best we can wish for is a quick change of Govt.

[Tony]

I think the best we can wish for is a quick change of Govt.

 

Absolutely, get the magic money tree working again.

[Wildcat]

Absolutely, get the magic money tree working again.

 

The sooner the people realise 25% savings cannot be squeezed out of the public sector, without sending us back in to recession and that it isn't a magic money tree the better.

[Rupert_Baehr]

The Child Poverty Action Group calculate that the poorest families spend 14% of their income in VAT, whereas the richest spend 5% of their income in VAT. Which makes an across the board increase in VAT a tax predominantly on the poor, surely?

 

How strange ... or is it predictable?

 

Imagine a company with 2 grades of workers:

 

The high-paid workers who each earn £1,000,000 a year (the rich)

The low-paid workers who each earn £10,000 a year (the poor.)

 

It's pay-rise time. The company decides to award everybody a 10% payrise.

 

The company directors argue: "Well, everybody is getting the same 10% payrise; that's very fair."

 

There are howls from the left-wing: "The rich are getting richer and the poor are getting poorer" (Not quite true; both are richer, but the gap between rich and poor - which was previously £990,000 - has widened and is now £1,089,000. The left argue: "It is wrong to talk about 'percentages' when you're determining payrises! - You can't spend 'a percent' - you spend pounds and the rich workers payrise in pounds is far, far greater than that of the poor."

 

It's a very good point. I agree with it, but unlike the left wing, I'm consistent.

 

Your argument ignores 'pounds' this time (because it makes it sound better) and you talk about 'percentages' "A 2.5% tax increase is far worse for the lower-paid because they spend 14 % of their income on VAT, whereas the richest spend only 5% of their income on VAT."

 

Err... but if it's wrong to use percentages when claiming that a payrise is fair (and I think it is) why is it suddenly right to use percentages when arguing against tax rises?

 

In the case of the payrise, 10% was far better for the higher-paid worker. He gets many more pounds.

In the case of a tax rise, 2.5% was far worse for the higher paid worker. He pays many more pounds.

 

An across the board increase in VAT means that the rich pay more than do the poor.

 

As somebody else mentioned, the attempt to reduce the budget deficit includes tax rises and spending cuts. - It was suggested that it was 20% tax rise and 80% spending cuts. (Though the government figures are 23% and 77% AFAIK.)

 

The government has raised the higher rates of tax, but there are limits to how far they can go. When I was a kid, I was rold the UK had a 'Supertax' of 20S and 6d in the pound. - Effectively an earnings cap.

 

The UK also had a massive outflow of people - the brain drain. Perhaps few of those who left were millionaires, but many saw 'the writing on the wall' and realised that they too were in line to pay far more in taxes and get far less for their money.

 

If the government was to introduce a very high rate of tax for the very rich, they might find that the very rich went elsewhere, taking their money and the jobs they produce with them.

 

I've no objection to a 50% tax rate on higher earners - I pay tax at the lowest rate and I doubt that will be changing anytime soon (unless the government increases the personal tax allowance significantly )

 

If you're trying to raise money through taxes, then established wisdom suggests that the best way to do it is to widen the tax base to include as many people as possible. VAT is still (largely) a tay on discretionary spending. - If you want a loaf of bread, there's no tax on that. If you want a packet of sweeties, you will be paying 20% tax as from next January.

 

I'm one of those people who spends a higher proportion of his money on VAT (or I would be if I lived in the UK) but I'd rather have the choice on paying the VAT - something I could decline to do by not spending money on a particular item - than having more money taken out in taxes before I receive it.

 

Whether we like the budget or not, it seems that potential investors and 'the market' do. The pound has strengthened recently and the cost of borrowing money - the interest rate on gilts - has fallen.