Morning, Darling
Peter Hoskin 8:59am
There's plenty of comment rattling around this morning on Darling's 10p tax compensation. The Guardian calls it “crude, simple and costly”, whilst the Mirror strains to remind us, “The bottom line is that 22 million low and middle-income earners will be £120 better off this year.” The best take, though, is Peter Riddell's in the Times. Here's his “bottom line”:
“So the Treasury will have to raise a very large amount next year. This means either higher taxes or lower spending since higher borrowing cannot be continued. The public finances are not in a healthy state after the sharp rise in public spending since 2000. The Institute for Fiscal Studies estimates that an £8 billion adjustment will have to be made at some stage. Now, with the economy slowing, is the wrong time. But a painful corrective package cannot be put off for ever.The danger is that unpopularity makes the Government less fiscally responsible so as to appease disgruntled supporters. So much for prudence and the Iron Chancellor.”
Now, it all comes down to whether voters are won over by Darling's profligacy. If they are, then Brown can consider his cynical mission accomplished. But – as Fraser discovered on a Five Live phone-in last night – many aren't falling for the con.
P.S. Phase 2 of the latest Brown relaunch begins at 12:30 today. We'll be covering it on Coffee House.
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Guy Incognito
May 14th, 2008 9:55am Report this commentPeter: Thank you very much for my t-shirt & 180th anniv issue, which arrived yesterday. The eldest Incognito now has something to wear to school, and something to read on his three-mile walk.
C Powell
May 14th, 2008 10:05am Report this commentI would like to know what the effect on higher earners is. Remember that by lowering the point at which the higher rate tax band kicks in, more people have now been made higher rate tax payers. But also by lowering the threshold by £600 my reckoning is that all higher rate tax payers will pay 40% of that i.e. £240. Even if they benefited from the £120 give away at the bottom they are still £120 worse off than before. Another stealth tax? In short, (1) some of the losers from the abolition of the 10p tax rate have been compensated but won't get the money for another few months; (2) a million of the poorest won't be compensated; (3) middle income earners are worse off by £120. Have I missed something?
Bruce, UK
May 14th, 2008 10:40am Report this commentNow we can all see the folly of thos Tory unfunded tax cuts! A new victory for the Great Helmsman!
John
May 14th, 2008 11:01am Report this commentNo, you haven't, C Powell, you have got it right - and we are being fed lie after lie. E.g. on MacLiebor's lapdog BBC (!) News front page, on the website: 'Alistair Darling put up the personal tax allowance by £600 - meaning anyone earning up to £40,835 will gain £120 this year'. This is a lie.
John
May 14th, 2008 11:02am Report this commentNo, you haven't, C Powell, you have got it right - and we are being fed lie after lie. E.g. on MacLiebor's lapdog BBC (!) News front page, on the website: 'Alistair Darling put up the personal tax allowance by £600 - meaning anyone earning up to £40,835 will gain £120 this year'. This is a lie.
figurewizard
May 14th, 2008 11:02am Report this commentThe abolition of the 10P tax band was part of Gordon Brown's pre-election budget. He knew by then that Blair was shortly stepping down and that he would be his unopposed successor. By calling a snap election before the honeymoon period had run its course, he would get at least five years in the job but he had to be sure that the crucial middle class vote would stick to him as it had to Blair; hence the 2P cut in the basic rate of tax. But by forcing the low paid to partly finance this by raising their tax bills he created a hole with this scheme into which he duly fell when he failed to go to the country in the autumn of last year. This makes him both devious and a fool and with the honourable exception of Frank Field, the persistent silence from the Labour benches on this indefensible device until now when they fear for their seats, makes the rest of this government good for nothing.
TomTom
May 14th, 2008 11:07am Report this commentIt is funny that Tony Blair was born a Scotsman and Alistair Darling was born a Londoner but that one was a consummate fraudster and the other a poor fool who was there when the Scotsmen passed the parcel.
Funny how Labour has gone back to its Scottish heritage to finally unravel the Labour Party
Fergus Pickering
May 14th, 2008 11:08am Report this commentC. Powell. Well, you must be wrong because the whole thing costs £2.7 billion. Where does that money actually go. If quite well off people pay more and poor people get more then, unless the poor outnumber the quite well off by lots and lots, the whole thing wouldn't cost anything at all. Perhaps Gordon and Alistair and putting it into Swiss Bank Accounts for their imminent retirement. Oh, and Peter, thank you for my tee shirt and book. I can't pretend anyone else in the family will wear it. None of them are fat enough.
Ed B
May 14th, 2008 11:08am Report this commentAs ye sow, so shall ye reap. The big picture here is that Brown spent all our money in the good times so has nothing left in reserve as the economy slows down and times get tough. 2.8 Billion would be small change if our finances had been managed prudently during the boom years. Serves them right.
Nicholas
May 14th, 2008 11:10am Report this commentWhatever happened to Gordon's resolve and difficult decision making that made him dig his heels in over police pay? A mere bagatelle by comparison. Truly duplicitous and conniving.
TOR
May 14th, 2008 11:13am Report this commentC Powell, is it not the case that £120 would have been paid at the bottom and £120 at the top (since that £600 is in the 20% rate)? Therefore by charging nothing for the first £600, but double for "last" £600 a middle income earner pays exactly the same?
Oscar
May 14th, 2008 12:33pm Report this commentGood point Nicholas. I wonder what the police are thinking.
Ian C
May 14th, 2008 2:41pm Report this commentFigurewizard, you are bang on the money with that analysis.
C Powell
May 14th, 2008 3:49pm Report this commentIve been doing my sums and the only way that this change can be neutral as far as higher rate taxpayers is concerned is by lowering the threshold at which higher rate tax is paid to £34,800 from the current £36,001. So that means that a whole load more people have now been made higher rate tax payers who weren't before. I don't know how many people are now caught but it would be good for some number cruncher to get the numbers. For them, this mini-Budget is effectively a tax increase. Another stealth tax, in short. And a shambles overall.
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