The BBC have a great story about this week’s budget where they show a graph of how much extra money you will have in your pocket based on what salary you earn. I can’t reproduce the graph here for copyright reasons so you’ll have to take a look at their page to see it.
There has been lots of discussion about how the tax system has been made simpler by the abolition of the 10% starting rate of income tax, which is fine, but when this is coupled with the other changes to taxation and National Insurance the net effect is that you are better off as long as you don’t earn under £17,000 a year.
The graph is pretty straightforward to create so I am sure that the Chancellor would have known what the net impact would have been on people of different incomes. If this is the case, I just don’t understand why he has done this – why would we tax low income people relatively more to pay for things that we theoretically all benefit from whereas we actually give more money to the richer in society? How is this fair? It’s even worse than the graph shows if you think how much the £131 loss is to someone £10,000 compared to the £198 gain to someone earning £43,000 – a 1.31% fall in income versus a 0.46% gain. I simply do not think this can be right – we shouldn’t be getting the poorest in society to pay more for benefits of government spending that we all share.
To top it all off, the chancellor dropped corporation tax for large companies from 30% to 28% and raised it for small businesses. It seems to me that, as I previously mentioned here, Noreena Hertz was right in her book The Silent Takeover that the role of the politician has been reduced to making the country a place to attract multinational corporations. Labour seem to be more and more in favour of following trickle-down economics – something that I just don’t buy in to.