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Secret budget tax blow for millions more
Joe Murphy and Paul Waugh25 Nov 2008
INDEPENDENT economists today warned that Alistair Darling's mini-budget will mean far worse tax hits than he claimed.
Millions of people earning more than £20,000 will pay more, said the respected Institute for Fiscal Studies, contradicting the Treasury's claim that those with salaries under £40,000 were safe.
It will also mean a punitive 60 per cent tax rate for some higher earners, as well as massive spending cuts.
Anyone earning between £100,000 and £106,000 will be hit because of changes to allowances and thresholds, as will those earning between £140,000 and £146,000 “for no obvious economic rationale”.
It said the squeeze on Whitehall spending after 2011 will crush £37 billion from frontline spending — £2 billion more than the promised cuts in the Conservative manifesto of 2005, which Labour attacked.
The package has also created a “powerful incentive” for the rich to increase their pension contributions to reduce their taxable income.
They might also engage in charitable giving, which will cut the Exchequer's revenues.
At the same time, the internationally-respected OECD think tank said Britain's economy will shrink much more sharply than any other G7 country in a “severe” downturn next year.
The criticisms were seized on by shadow chancellor George Osborne, who was today calling for an emergency debate in the Commons.
IFS director Robert Chote said the creation of the new 45p tax band had taken up people's attention, but he warned: “If more of these people declare less taxable income, put more into their pensions, increase charitable giving or engage in avoidance than the Treasury expects, then it may raise less than it hopes.”
Mr Chote also disputed claims that yesterday was a “Robin Hood” budget, warning that the poorest could be hit hardest by the savage cuts in public spending. Mr Chote backed the overall package as necessary, though he said the impact was “uncertain”.
“On balance the risk of acting may be less than the risk of refusing to,” he said. The cuts in Whitehall spending were needed because, he said, there were fears the economy will never fully recover its strength.
“By far the most important reason for the squeeze is that the Treasury believes that the credit crunch will punch a permanent £60 billion hole in the capacity of the economy,” he said.
Reader views (16)
If Brown ran a real business, or a family he would be bankrupt. Burglar Brown hugely endebted the UK with his loans and off balance sheet debts. Now he borrows more than when the IMF came in, like Iceland is now.
At the same time he preens himself with his psychotic grin and claims he is clever. Then he lies about the facts based on his own statistics. Brown's arrogant stupidity was revealed in his 10 pence tax fiasco, that he first claimed a triumph, hailed by his stupid MP's, who later found out the truth and turned him in. Now he has done the same.
Endless deluded Brown boasts that he 'ended the economic cycle' and 'no more boom and bust', now replaced by soundbites of 'responsible' and 'the right thing to do' make people want to vomit.
The hypocrisy, lies, shameless incompetence and disaster of Brown would make normal people resign in disgrace. Installing Mandy as a Lord after he was sacked twice from public office brands Brown with the same. People have not realised how that appointment 'legitimises' lies and spinning by Labour.
Brown's overall stategy is to drag people down so they have to depend on Labour, to put the UK into debt with so little private pensions or wealth and so many depending on the state for pay and pensions in disablity, dole, and allowances/ credits that they have to vote labour. Now Scotland has 50% of all incomes from the State.
Burlar Brown 'tax, endebt, spend and make depend'.
Do not be deceived by Brown.
- Jim, fife, 26/11/2008 09:59
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So Tax cuts and more dosh for the scroungers to spend on beer and fags to boost the economy, the hard working middle classes have less to spend, mmmm, dont think this is going to do anything to boost spending.
- Brian, Wiltshire, 26/11/2008 08:45
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"Why is it always the same with Labour?" - because they only tell the truth by accident.
- David, Lewes, East Sussex, 26/11/2008 06:47
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The "leaders" MUST do the following:-
Pull out of Afghanistan now (yes, this may lead to greater issue later but frankly we may not exist as a functioning country by the time that happens)
Pull out of Iraq. Duh. Obvious.
Deport all illegal immigrants.
Abolish welfare for anyone that is not disabled or certifiably ill (including single mothers blah blah blah).
Abolish social housing. Charities can house people in tents. It's more eco anyway.
Scrap gold-standard pensions for government employees.
Let the banks fail. If they can't compete under their own rules why should they live under the rules of socialism.
Start paying down our debt.
Work out a way to get people producing goods and services that we can sell to the rest of the world and create a positive balance of trade. Without this little thing... we are doomed.
Happy days.
- Anthony Cowlam, New York, US, 26/11/2008 05:21
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The sooner Nu Labor goes the better. The Conservatives give me more confidence than Crash Gordon!
- Jacqueline, Hampstead, London, 25/11/2008 22:30
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AT least finally this shows that New Labour is dead .. (that's if ever it was alive) .. and people will have a clear choice to make at the next general election which will NOT be called early as these hypocritical parasites will cling to power for as long as possible ..
- Marke, Houston, Texas, 25/11/2008 22:28
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Ther is no secret budget tax. Darling is targetting the very people who can afford to pay more tax. Well done Gordon and Alastair
- Keith Price, Luton, England, 25/11/2008 21:54
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This is just the start of it, we will be forced into a corner by the government to parachute us into the Euro next.
- Jpg, London, 25/11/2008 21:00
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As is usual the politicians have no idea what they are doing-These potential tax rises will give us all the opportunity of arranging our affairs such that the tax take will be far less rather than more-many of my firends and colleagues are today making enquiries about emigrating in 2010-no-one wants to go back to the days of 60% income tax so good luck Darling.
- Harvey Lawrence, London UK, 25/11/2008 19:56
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What do you expect from an ex-solicitor? It's really too much to ask the poor guy to know anything about economics. Likewise his boss - an ex-lawyer. What we need is a General to stage a coup and get rid of this lot. After all the way the country is run by them is not far from the style of those less-rich countries in the southern hemisphere is it?
- John Problem, Hackney Wick, London, UK, 25/11/2008 18:58
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Are you telling me that the Government announced something and didn't quite give a complete and accurate account of the impact...??? Never! Same old Gordon the "no spin", "no parisan behaviour", "No Tax increases", "definately no impact for the lower paid", "definately no reduction in public spending", "completely independent interest rate control for the BOE", "fiscal prudence"..... His epitaph should read "No promise I won't break to look like a statesman" - The man is a shambles, even if this is the right thing to do, his foot-in-mouth communication of it, like other supposed giveaways, reflect his lack of ability to communicate. He should be reminded that 75% of communication is listening - he can't even get the talking bit right.
- Jon, london,England, 25/11/2008 17:59
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Why is it always the same with Labour? We get an announcement that says one thing, and then when organisations such as the eminently respected Institute for Fiscal Studies examines the small print, we find we have yet again been deceived. No doubt this shameless Government will keep insisting the Institute has got it all wrong, but I think the people know who to believe.
- James Elliott, Eastbourne UK, 25/11/2008 17:55
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This whole budget will be a disaster. Any hope Brown had of recovering is now gone. He will lose the next election for sure. The key to all this was to get the Banks lending and low interest rates. All this money wasted for so little benefit.
- Peter Ellis, Bushey herts England, 25/11/2008 17:28
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Just another half-baked, knee jerk ill thought out New Labour policy. So whats different from previous ones - the answer is nothing.
Same old 'Bull', same old spin and lies! Gordon Brown really must detest the UK Public. Maybe we will all be 'collectively punished' for not being suckered in by the greatest ponsi-pyramid scam ever run by a British political party.
- Uncle Vanya, Chelmsford England, 25/11/2008 17:28
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Er. where's the evidence in the article that those with income over £20,000 will pay more?
- Jon, London, 25/11/2008 17:12
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I am glad that I am living in a 3rd world country, at least we wont have to send money that we dont have to 4th world countries. And maybe 1st world countries (China and eventually India ...etc) will soon be sending money to us. I cant wait for food packages from the far..far east to help me and my wife in our dotage. I am getting used to rice already, not as bad I first thought. God bless America.
- Colin Bond, London, 25/11/2008 17:08
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