UK Budget Headlines

The headlines in response to the new Labour budget from Alistair Darling all seem to claim a rise in taxes – focusing largely on the increased percentage paid in the top bracket – from 45% to 50% on £150,000 and up. Also mentioned are the per unit sales tax of “2p on fuel, 1p on beer, and 7p on cigarettes”.

What confuses me is the comparative absence of attention on the decrease in income tax on the vast majority of earners. Metro has a handy “how will it affect you list”. And the increase in spending focused on getting people back to work. And the investment in green infrastructure and development. These are mentioned, of course, in a bullet-point kind of way, but the headline is about the tax that affects 1% of the population, not the massive work done on behalf of the majority of workers, newly unemployed, and the young.

Instead, people are pointing out the borrowing necessary to maintain the increase in spending (and anticipated tax hikes in coming years to pay back those international loans). Apparently, the debt will be roughly equivalent to £23,000 per person (79% of GDP), before slowing decreasing over the next ten years. Before people start passing out, I think it’s worth noting that the US debt is about $35,500 per person, or about £24,000. Not that a country should be aiming for the same deficit as the US, but it’s worth pointing out that the US has had an increasing deficit for about 9 years now, and, while the economy is in a bad situation, it wasn’t caused by government borrowing.

I understand the strain on people who are business leaders, who would perhaps be better used with tax incentives related to long-term job creation and investment, but by the same token, if you’re earning that kind of dosh, a) your accountant can probably ease the pain and b) even after tax you’re taking home more than 3 times than your average joe. How much do you really need?

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