Reducing corporation tax while raising VAT; this is a classic a "Nasty Party" budget, taxing the poor to support the rich.



Budget 2010: Pain now, more pain later in austerity plan

• George Osborne delivers £40bn austerity budget
• Controversial rise in VAT to 20% from January


* Larry Elliott and Patrick Wintour
* guardian.co.uk, Tuesday 22 June 2010 21.27 BST


The chancellor announced that VAT will rise to 20% as he laid out the government's strategy to balance its books within five years Link to this video

George Osborne has imposed austerity measures on every family in Britain after announcing a £40bn package of emergency tax increases, welfare cuts and Whitehall spending restraint designed to slash the budget deficit by the end of the parliament.

The chancellor said the "unavoidable budget" required a VAT rise from 17.5% to 20% next January, higher capital gains tax, a levy on banks, a two-year public sector pay freeze and less generous benefits, but insisted the package was needed to prevent the financial markets from turning on Britain.

In his debut budget speech, Osborne pleased the ratings agencies and the Organisation for Economic Co-operation and Development by intensifying the £73bn squeeze already planned by the last Labour government. But he signalled a second dose of gloom in October, when a three-year comprehensive spending review will spell out the size of the cuts for individual government departments.

Osborne warned today that ring-fencing the NHS and international development meant non-protected departments would face average real cuts of 25% but that some clemency would be shown to education and defence.

The chancellor avoided even deeper cuts in Whitehall by earmarking the welfare budget for more than a third – £11bn – of the £32bn reduction in spending. Child benefit will be frozen, and the government will eventually save almost £6bn a year by linking all state benefits other than pensions to the slower-growing consumer prices index rather than the retail prices index.

The Treasury will raise more than £12bn from the increase in VAT, but the chancellor sought to soften the blow from the toughest budget in modern times by raising personal allowances by £1,000, linking pensions to earnings and raising child credits for the next two years.

He said a four-year phased cut in corporation tax would help the private sector become the engine of growth, and the economy would have to rely more heavily on investment and exports over the coming years.

Seeking to pin the blame for the tough measures on Gordon Brown, the chancellor said: "Today we have paid the debts of a failed past. And laid the foundations for a more prosperous future. The richest paying the most and the vulnerable protected. That is our approach. Prosperity for all. That is our goal."

Vince Cable, the Liberal Democrat business secretary, agreed with the description of the budget as "tough but fair". Writing in the Guardian, Cable said the budget would be vilified by those who sought to undermine the coalition government or did not understand the depths of the crisis. "But it is necessary and right".

Osborne rejected criticism from Labour that the budget threatened to derail the recovery, saying that the independent Office for Budget Responsibility had only marginally reduced its forecasts for growth this year and next as a result of today's spending cuts and tax increases.

The need to placate the markets after the sovereign debt crisis in the euro area last month meant the pace of deficit reduction had to be accelerated, the chancellor added. "The consequences for Britain would be severe.

Higher interest rates, more business failures, sharper rises in unemployment, and potentially even a catastrophic loss of confidence and the end of the recovery. We cannot let that happen." Net borrowing – a combination of the running costs of government and spending on infrastructure projects – will fall from 10.1% of national output to 1.1% within five years.

The budget measures are designed to turn a structural deficit in current spending of 4.8% of GDP into a surplus of 0.3% in four years, holding out the prospect of pre-election tax cuts if the economy performs as the chancellor expects.

Tonight, the ratings agency Fitch said the budget would "materially strengthen confidence" in the country's public finances, while the Organisation for Economic Co-operation and Development, the Paris-based thinktank for developed country governments, praised Osborne for his "courage".

Harriet Harman, the interim Labour leader, picked out the Liberal Democrats for attack, saying: "This reckless Tory budget would not be possible without the Lib Dems. The Lib Dems denounced early cuts; now they are backing them. They denounced VAT increases; now they are voting for them. How could they support everything they fought against? How could they let down everyone who voted for them? How could they let the Tories so exploit them? Do they not see that they are just a figleaf?"

Nick Clegg faced tough questioning at his parliamentary party meeting tonight, but pinpointed proposals that would not have been in the budget but for his interventions. Simon Hughes, the deputy leader, said the VAT rise was difficult, but the scale of spending cuts was unavoidable. Clegg had been prepared for attacks by Labour that he has turned into a Tory patsy, but he is insistent he has ensured the budget has not followed the path of most previous fiscal consolidations by hitting the poor hardest. He also agreed with Osborne over dinner a month ago that the consolidation should represent a plan for a five-year parliament, and the bulk of the details should be spelled out now.

But figures produced by the Treasury purporting to show the richest will suffer most extend only to 2012-3, by which time most of the welfare cuts will not have been implemented. The Treasury argues that further reforms to combat child poverty will be announced later in the parliament, and cites suggestions by the Institute for Fiscal Studies that VAT is not necessarily regressive.

Clegg and Cable, who condemned a planned Tory VAT "tax bombshell" during the election, also admit privately it is not possible to tackle the deficit without hitting welfare. The Lib Dems are proud that the budget retains their plans for a rise in capital gains tax, and rightwing calls for a taper relief have been rejected.

Osborne told the Commons: "In this budget everyone will be asked to contribute but in return we make this commitment. Everyone will share the rewards when we succeed. When we say that we are all in this together we mean it." But he faces the charge that he has gone further than he needs to accelerate the deficit reduction

Budget 2010: Pain now, more pain later in austerity plan | UK news | The Guardian

Boost for pensioners, relief for banks and businesses

The coalition's first budget promised pain, but several groups emerged more unscathed than they could have imagined


* Katie Allen
* The Guardian, Wednesday 23 June 2010


George Osborne promised to spread the pain fairly in his austerity budget. But clearly some were more immune than others:

Top earners

Those on very high incomes, £150,000 and up, could have fared much worse in a budget billed as "the richest paying the most and the vulnerable protected". The big tax hike, VAT, hits the poor more than the rich, who spend a lower proportion of their income on VAT'd goods. The super-rich have been hit with a 50% income tax rate but that came in earlier this year. The only real change for their personal finances is the rise in capital gains tax, which at 28% is lower than the 40% or 50% trailed and not high in an international context.

Non-doms have escaped the axeman for now. "In the event, while there were plenty of changes which will impact them like everybody else, the non-dom community did not get its own set of changes," said David Kilshaw, head of private client advisory at KPMG.

Pensioners

From next April the basic state pension will be relinked with earnings and will increase every year by the highest of earnings, inflation or 2.5%. The charity Age UK's director Michelle Mitchell said: "We are delighted the government is introducing a 'triple guarantee' to raise the basic state pension from April, and also a matching increase for pension credit which will help the poorest in later life, but this is offset by the rise in VAT which will hit poorer households hardest, including low income pensioners."

Bankers

As for top earners, there will be many in banks relieved the budget was not tougher on them. They will benefit from the corporate tax rate cut and will not be hit with any new bonus taxes for now. There will be a new bank levy and the VAT hike will also hurt, but banks largely knew that both were coming. There will also be some relief that France and Germany have moved on a tax at the same time.

Big business

Business groups got their wish for a four to one spending cuts to tax ratio.

Corporation tax, currently 28%, will fall by 1p in the pound a year for four consecutive years until it reaches 24%. The fact it will take some years is unlikely to bother businesses who will be grateful for the clarity and it may also help sway those businesses considering whether to locate in Britain. The CBI said that taken together with proposals on foreign profits and intellectual property it could help reverse the flow of companies overseas. There were other elements to please business, said Neal Todd, tax expert at Berwin Leighton Paisner. "Taxpayers as a whole, individuals and businesses, will welcome the move towards simplification."

Start-ups

There was an increase in entrepreneurs' relief from capital gains tax from £2m of gains to £5m of gains. The small companies rate of corporation tax is to be reduced to 20%. Businesses starting up outside the south-east or east – in those parts of the country the government feels are hardest hit by public sector cuts – will be let off employer national insurance contributions, up to £5,000, for each of the first 10 employees recruited. "In all, a nod to entrepreneurs to show they are still appreciated," said Patrick Stevens, tax partner at Ernst & Young.

The Federation of Small Businesses welcomed the extension of the Enterprise Finance Guarantee to help small companies struggling to access loans. But it expressed concern that rises in employer national insurance contributions were not completely reversed and warned the VAT rise would hurt smaller companies who have to pass it on.

Drinkers

There were none of the usual duty rises on alcohol and cigarettes and Osborne is reversing a government decision to increase duties on cider by 10% above inflation.

Boost for pensioners, relief for banks and businesses | UK news | The Guardian

Budget 2010 losers: women, disabled and families bear the brunt

Worth on average £70 a week, the costs of DLA to the taxpayer have quadrupled to £11bn a year

* Randeep Ramesh and Patrick Butler
* The Guardian, Wednesday 23 June 2010

Disabled people

The 1.8 million people of working age who claim disability living allowance have come out as big losers from the budget. This group, whose numbers have risen by more than 40% since 1997, will be forced to undertake a medical assessment to ensure only those who need it can claim the benefit. Worth on average £70 a week, the costs of DLA to the taxpayer have quadrupled to £11bn a year. Three times as many claim as when the benefit was introduced 18 years ago. DLA claimants can be working, as the benefit pays out in recognition of the disability and for a carer.

Iain Duncan Smith, the work and pensions secretary, has already made it clear that he believes applying tougher tests will force large numbers back into the labour force, despite misgivings about the medical assessments used and doubts about the efficacy of the jobs programme. The powerful disabled lobby say that they are being unfairly scapegoated, as the same benefit for carers, attendance allowance, has not been targeted, and that the proposal to introduce a new medical assessment for DLA appears designed purely to reduce the number of people eligible.

Middle income families

By reducing child tax credits for families with a household income of more than £40,000, the government has abolished a key middle-class subsidy. The chancellor said spending on tax credits had risen from £18bn in 2003 to £30bn, with about 5 million families now claiming the benefits. To reduce the taxpayer's bill, the government will reduce the numbers who are eligible for the tax credit. At present the benefit can be claimed by households with incomes of up to £58,000. More than 600,000 middle-income families will be hit by new curbs. The emergency budget red book warns that the ceiling will be lowered even further from 2012-13. This, coupled with the rise in VAT and national insurance, will mean a household with a working couple both earning the median wage will be worse off to the tune of £1,200 a year after the budget.

Mothers

The decision to freeze child benefit for three years will mean parents who might have been expecting the £20-a-week benefit to increase by almost a pound a week over three years will be disappointed. The chancellor also announced that the baby element of child tax credit will be abolished from the beginning of the next tax year. This was paid to every eligible family with a child under the age of one. Gordon Brown's health in pregnancy grant, a £190 payment to all pregnant women in the final trimester, will be abolished next April. The grant was introduced only last year to cut infant mortality rates by ensuring all mothers-to-be can afford to eat healthily in the runup to giving birth. Low income mothers will also lose the one-off £500 Sure Start maternity grant, designed to help towards the costs of a new baby. All these cuts will affect families with the youngest children and will concern many as the costs of a child are particularly high in the first year of life. To ram home the message that a baby is a responsibility of the family, not the state, the chancellor announced that lone parents will be expected to look for work when their youngest child goes to school.

The north

The prospect of swingeing cuts to public services budgets and the attack on welfare spending means large parts of the Midlands and the north of England may end up disproportionately hard hit by the budget.

According to the Centre for Cities thinktank a number of areas outside London and the south-east are "highly vulnerable" because of their economic dependency on big public sector employers, from government departments to local councils, universities and NHS trusts. These places, which include Newcastle, Sunderland, Liverpool, Glasgow and Barnsley, are likely to be badly affected by expected public sector job losses. They typically have small and underdeveloped private sectors, and these are often highly dependent on public business.

They also have high numbers of people on low incomes who will be disproportionately affected by the rise in VAT and changes to benefits, said Katy Schmuecker, of the thinktank IPPR North. Wales, the north-east and the north-west have the highest percentage of people on disability living allowance.

George Osborne appeared to acknowledge some of the dangers. He promised to retain some high profile infrastructure projects in the regions, including the upgrade of the Tyne and Wear metro, the Manchester Metrolink extension and the refurbishment of Birmingham New Street station. A new "regional growth fund" will offer money for regional projects that create jobs and show innovation. And new businesses outside London and the south-east will be exempt from the first £5,000 of national insurance payments for each of the first 10 employees they take on. He also promised measures in the summer to kickstart private economies outside the south-east and replace regional development agencies with new local initiatives.

Poorer families in London

The government's promise to cap housing payments at £280 a week for a one-bedroom property and £400 a week for a four-bedroom family home could make many properties unaffordable, especially for people in areas such as inner London.

Shelter's chief executive, Campbell Robb, said nearly half of tenants already found their housing benefit payments did not cover the rent. Most benefit claimants were pensioners and low paid workers, and many would end up in debt in an attempt to remain in their property.

Robb said: "If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness." He added: "Moving people around will throw up a big challenges for local authorities."

Budget 2010 losers: women, disabled and families bear the brunt | Politics | The Guardian

Originally Posted by contracycle

women

... whose entire economic exitence is reduced to babies.

__________________
Standard disclaimer: the disgusting statements contained in this post are the views of the poster, and unless specified do not represent the views of the moderators or the site's owners.

Quote:

... whose entire economic exitence is reduced to babies.

It can be amazingly fulfilling. Why would they want anything else? What is wrong with an ambition to be simply a life support system for a procreative womb?