Monday, 19 March 2012

Osborne sets out case for 50p rate cut

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Mr Osborne is not a reformist, is a salesman. Weirdly, he's got plenty of buyers from outside his core target (a rich niche in itself). He needs to explain why the focus of policy is cutting income taxes for high earners, making it easier to fire people and removing social benefits. Why isn't it about balanced growth through investment and modernisation? 

Is anyone seriously thinking the GDP will grow if people making > £150k a year will pay 5 or 10p less to Britain's coffers? It will only increase inequality and further reduce social mobility.

Why do people need to move out of their house if they receive benefits in excess of £26k per annum (we were told life is about hard choices), but Mr Cameron is "instinctively" moved to tears about widows risking to lose their £2m houses if they would pay a wealth tax? Why isn't life about hard choices for everyone? 

Perhaps Mr Osbourne should ask himself is it normal that a London flat with ceilings so low that one can reach them standing costs half a million pounds? 

The fight against tax avoidance is a government duty that must be pursued in any case, not a political lolly-pop to please the MPs, and a bargain chip to make the sorry Mr Clegg to nod to the return to less than 50p.

Beware fellow muppets!


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March 18, 2012 6:55 pm

Osborne sets out case for 50p rate cut

George Osborne©Getty
George Osborne on Sunday began the complex political task of explaining how a Budget that abolishes the 50p top rate of tax for Britain’s richest people will also have at its core one central purpose: “To help low and middle earners.”
Mr Osborne claims to have constructed a package aimed at the “hard working families”, but the message risks being drowned out by his decision – confirmed by several officials close to the Budget process – to cut tax on earnings above £150,000 from 50p to 45p from April 2013.





The chancellor said that the main measures in Wednesday’s Budget have been fixed, but the political battle is only just beginning. Mr Osborne will on Monday sit down with David Cameron, prime minister, Nick Clegg, deputy leader, and Danny Alexander, Lib Dem treasury chief secretary, to decide how to spin it.
Already the lines of engagement have been drawn. Ed Balls, shadow chancellor, will focus relentlessly on Mr Osborne’s plan to scrap the 50p income tax rate as emblematic of an “out of touch” Tory-led government determined to help its wealthy friends.
“Whose side is he on?” Mr Balls said on Sunday on the BBC’s Andrew Marr Show. “What planet are they on?” Labour claims the abolition of the 50p rate is not even a top priority for leading business groups such as the CBI and cannot be justified at a time when child tax credits are being curtailed.
But Mr Osborne is determined to press ahead, in spite of warnings from some Tory MPs in some marginal seats that he is falling into a Labour trap. He has been persuaded by a combination of factors, not least his belief that the 50p rate does not bring in much money and the view that it sends out a negative signal about Britain to overseas investors.
Furthermore, Mr Osborne does not think it would be any easier to scrap the 50p rate nearer to the election: why not take the pain now and give the Tory right, business, the Conservative press and party donors something to cheer?
Mr Osborne’s task will be to convince a sceptical electorate that the removal of the 50p rate is part of a broader package – painstakingly agreed with the Liberal Democrats – which transfers money from the rich to middle Britain, through the closing of tax loopholes and reliefs.
This in turn will help to fund a raising of the income tax threshold closer to £10,000, helping low and middle income families, a policy which was on the front cover of the Lib Dem election manifesto.
The Liberal Democrats feel an urgent need to make the “fairness” case, hence the party’s description of the Budget as a “Robin Hood” package. Mr Clegg has insisted that the lost revenue from cutting the 50p rate must be offset by a squeeze on tax avoidance that raises at least double the amount.
One party official said: “The people who must benefit are working people in the squeezed middle: top earning tax dodgers and their army of flashy accountants should be quaking in their boots.”
Mr Clegg cannot afford to be branded by Labour as an accomplice to a Conservative chancellor, supposedly helping his wealthy friends. Therefore, Mr Clegg’s claim that his idea of a “tycoon tax” – raising the overall tax take from the rich – will be embodied in the Budget.
Treasury insiders note this is the first Budget in years to have personal tax reform at its heart, but Mr Osborne is also under pressure to use his statement on Wednesday to deliver help to business.
John Cridland, CBI director-general, told the BBC’s Sunday Politics that the 50p rate was “bad for Britain and bad for business” but said the top priority should be tax breaks for business, notably an extension of capital allowances for investment in energy and infrastructure projects.
Mr Cridland said he was feeling more optimistic about economic prospects and that some “canny” pro-business policies in the Budget would encourage companies to start spending hoarded cash.

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