March 21, 2007

Brown finishes with a Jobs

The Chancellor’s been watching Steve Jobs, the maverick boss of Apple. In his final budget, Brown saved the big news until the end, just as Jobs always does – a 2p cut in the basic rate of income tax. It’s not a new iPod, but the iPod generation will be happy…

...until they see the small print. Less trumpeted was the scrapping of the lower rate of income tax at 10p. So the cut in the basic rate of income tax will be almost ‘revenue neutral’. Put in laymans terms, the BBC reckon Brown will get £8bn more by cutting the lower rate, but lose £9.5bn by reducing the basic rate. The £1.5bn will probably be made up partly through a rise in small business tax – sure to be controversial – and by selling more government buildings and the student loans, both short-term gains.

I still don’t understand why tax on beer and wine goes up by 1p per pint or 5p per bottle, yet spirits – which surely contribute to anti-social behaviour as much as beer – is frozen. Measures on the environment will be welcomed, but are hardly radical. The inheritance tax threshold went up to £350,000 (by 2010), by which time many houses will cost that much.

It was a big-headline budget, but beneath the surface, Brown did little more than tinker at the margins. As Menzies Campbell said, it was a budget of a man ready to move on.

- 4 comments by 2 or more people Not publicly viewable

  1. Mathew Mannion

    Since the 10% tax bracket only lasts for about £2000 anyway, the number of people who will have a tax increase will be minimal. Taking into account tax credits, everyone up to the new NI threshold should have a tax break (on the assumption that everyone claimed for the tax credits they are entitled to, which is not so clear cut). Personally, if the measures came in today, I would be paying around £250 less tax a year.

    21 Mar 2007, 16:03

  2. But everyone’s first £2,000 or so was subject to 10% tax – that’ll now be 20%. So anyone earning over £2k will be paying an extra £200.

    21 Mar 2007, 17:09

  3. The change hits the lower paid. Those whose pay doesn’t get them into the 22% tax range see their income tax double.

    Anyone whose pay is less than that necessary to reach ten times the size of the 10% band suffers. Their increased tax offsets the lower tax paid by those on higher incomes. How New Labour!

    21 Mar 2007, 18:21

  4. The second paragraph is unwieldy. This is better

    Anyone who pays less than £50 income tax per week suffers. Their increased tax offsets the lower tax paid by higher earners. How New Labour!.

    21 Mar 2007, 18:39

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