Posts tagged ‘George Osborne’

Lies, damned lies and the EU referendum campaign

With only a few days to go now, the end of the European Union referendum campaign is, after four months, finally (and many would say thankfully) within sight. At the moment of writing the polls are saying that it is too close to call although the bookies still reckon ‘Remain’ will win. Judging by some of the recent output from the ‘Remain’ camp, the tightening polls have seemingly put the wind up them as they awake to the possibility that this whole business is not necessarily going to be the cakewalk they may have thought it would be.

To say that this has been an awful campaign characterised by deliberate disinformation, half-truths, scare tactics, poppycock, threats and outright lies would be to understate exactly how bad the approach by each side has been. Between daft statements about the future of our national religion the NHS, inflated estimates of what our annual contribution to the EU budget is, xenophobic dog-whistles regarding immigration, warnings from the great and the good (as well as the not as good)* about an economic downturn to rival that of 2008, and the potential outbreak of another global conflict (to name but a few) there has been little sensible discussion from the vast majority of the political establishment and the commentariat that feed upon them.

With the most prominent figures in both official campaigns all being Conservatives MPs, one could be forgiven for thinking that the other parties are barely involved given how lacklustre their contributions have generally been. Even Nigel Farage has, at least in media terms, been quieter than one might have expected. This apparent lack of input (or attention paid to it anyway) does little to dissuade the more cynical that this whole thing is, in some quarters, less about our relationship with Europe and its political bodies and more an extended hustings over who gets to succeed David Cameron as Prime Minister at some point between now and the next scheduled general election in 2020. (Putting my prognostication cap on for a moment, I would say that it is highly unlikely that any of the prominent individuals involved, i.e. Osborne, Johnson and Gove, will get the job.)

Away from the internal Conservative squabbles, both official campaigns often seem to think that they are fighting a general election with wild spending promises of what we could do with our annual contributions instead (Leave) matched by calls for a credible exit plan (Remain) rather than a referendum one. This nonsensical approach is perhaps because the UK doesn’t (despite this being the third prominent one in five years) have much experience with referenda and so the major participants are taking what they do know and trying to see if all of the skill set is transferable.**

Whatever the eventual result, the last few days are going to be full of plenty more twaddle and there is going to be a lot of nail-biting on both sides before the result is announced come the 24th.

This was originally posted at Libertarian Home last Monday (June 13th before the Labour MP Jo Cox was killed. Her murder, senseless as it was, and the aftermath of it have only reinforced my opinions about the contemptible behaviour of both campaigns.

* As an aside, how many favours has David Cameron had to call in and how many does he now owe as a result?

** Yes, I’m aware that Matthew Elliott ran the ‘No’ campaign in the AV referendum but there is a difference between fighting for the status quo (as he was then) and against it*** when you have to make all the running.

*** Not that ‘Remain’ is a vote for the status quo.

Paying tax is not an aspiration

George Osborne is alleged to have told some backbench Conservative MPs:

“Let’s not forget there are advantages in more people paying tax at 40p.

“It means they feel they are a success and joining the aspirational classes. That means they are more likely to think like Conservatives and vote Conservative.

“If they are paying 40p tax they have a greater interest in cutting Government spending because they are paying for it. All the polling evidence suggests that I am right.”

Whilst I would prefer to earn more money, I see paying more tax as a bug, not a feature – and I certainly don’t aspire to pay more of it which is why I take measures (subject to the limitations of PAYE) to reduce the amount stolen from me each month.

However I can see that there is, in a perverse and twisted way, some logic to what Gideon is saying – especially in the last line of quoted above. The problem is that whilst those who are paying more for government certainly have a greater interest in cutting government spending, the reality is that government isn’t cutting spending, has deliberately squeezed the basic tax rate band in order to catch more people in the 40% band and shows no indication of stopping doing either.

And George wonders why the ‘aspirational classes’ are disillusioned with him and his party.

On the proposed NMW increase

In an interview with the BBC yesterday George Osborne said that he would like to see above inflation increases in the National Minimum Wage (NMW), potentially increasing the rate for those aged 21 and over to £7/hour. Whether this was a pre-emptive strike or a panicky reaction ahead of Millipede Jr’s speech on the cost of living today is left up to the reader to decide based on their own particular biases.

The bare numbers (courtesy of Listen to Taxman) for someone doing a 37.5 hour week in the 2013/14 tax year are as follows:

£6.31/hour £7.00/hour £ Change % Change
Gross Pay 12,304.50 13,650.00 1,345,50 10.94
Income Tax 572.90 842.00 269.10 46.97
Employee National Insurance 546.78 708.24 161.46 29.53
Employer National Insurance 635.97 821.65 185.68 29.20
Nett Pay 11,184.82 12,099.76 914.94 8.18

Increasing the NMW to £7 would (in this tax year) make the employee £914.94 better off, the government £616.24 better off and the employer £1,531.18 worse off.*

Yet increasing the thresholds for Income Tax and all types of National Insurance to £12,304.50 would leave the employee with an extra £1,119.68 in their pocket, the employer with £635.97 per employee to spend on something else and a reduction in the amount taken by government of £1,755.65 – which would no doubt be offset by a reduction in the need to hand out quite so much in in-work benefits (and, potentially, reduce the admin overheads involved).

Not that it will happen though.

*Obviously this assumes that nobody loses their jobs because their labour isn’t worth the increased amount because at that point the employee and the government are both worse off…

Spot the difference

Here we have two pieces of prose, one (on the left) from Iain Martin, journalist and political commentator writing for the Telegraph and the second (on the right) from Patrick Warner, Conservative Councillor for Sovereign Ward, Eastbourne.

They look identical, no?

Both were published yesterday (April 5th) with Iain’s showing up at approximately 0700 (the earliest comment appears at 0713) and Patrick’s at 1503.

The obvious thought is that Cllr Warner has copied the entire thing without attribution and is passing it off as his own work.

Cllr Warner has been asked (via twitter) why his piece looks uncannily like Iain Martin’s but he has yet to respond.

UPDATE:

Cllr Warner has apologised to Iain Martin for not giving him credit.

Not sure why he has to copy entire articles and occasionally forget to attribute them in order to share pieces of interest with his readers though…

Patsy Pasty

Of all the tax changes in the budget which the politicians, press and public could have got themselves worked up about – cutting the top rate, freezing grannies allowance, the ongoing process of pulling people into high rates, the marginal rates levied on those earning between £50k and £60k with children, the ever increasing duties on petrol, alcohol and tobacco – it is changing of what is charged VAT with respect of hot, take-away food which seems to causing the government the most trouble.

The ludricous lengths that that our elected wastals and the copy-and-paste artists in the MSM have gone to over the whole matter is laughable in the extreme. Thanks to them we have had to put up with, amongst other things, iDave and various cabinet ministers attemting to remember if, where and when they last ate a pasty (and the MSN chasing these recollections up); Millipede Jr (with his likely Brutus in tow) going to Greggs for lunch as part of a staged photoshoot; and supposed ‘quality’ newspaper The Telegraph resorting to live blogging the entire fiasco.

Fankly, if the whole business means anything, it is as

  1. yet another reminder how pathetically out of touch the inhabitants of the Westminster village really are,
  2. showing how woefully ignorant and stupid the so-called reporters who are paid to fill up the output of the media really, and
  3. a demonstration of how utterly stupid VAT is.

As I’m certain my readers are aware, VAT is an EU tax and thus subject to the whims of Brussels and the rent-seekers to be found in that city. It is therefore no surprise to learn that the reason for impsition of the ‘pasty tax’ is somewhat more than the bland statement Osborne made to parliament during his speech:

We will also address some of the loopholes and anomalies in our VAT system.

[…]

Hot takeaway food on high streets has been charged VAT for more than twenty years; but some new hot takeaway products in supermarkets are not.

A fuller account of the reasons why the children supposedly running the country are in the mess that they are in comes from Richard North of EU Referendum:

Enter Manfred Bog who, back in 1994 was running three mobile snack bars. After a series of disputes with the German tax authorities, Bog in 2006 fixed upon one particular issue, that 70 percent of his sales were being assessed for standard rate of VAT, while the remainder only attracted the lower rate of five percent.

The German authorities here were arguing that the larger proportion of the food sold was consumed “on the premises” (i.e., under a shelter provided by Bog) and, therefore, the trade was a “service” rather than the supply of goods – thus attracting the higher rate of VAT.

We should not detain ourselves with the finding of the German financial court, the Bundesfinanzhof. Down that path lies madness. Suffice to say that the case was joined by others, including a firm called CinemaxX, arguing the toss about popcorn sales. Again, the service/supply of goods argument was in the cooking pot. And then there was Mr Lohmeyer, with his snack stalls and a swinging grill, plus – of course – Fleischerei Nier. Don’t even go there.

Cutting to the chase on this bundle of cases, the judgement on 10 March last year ruled that the supply of food or meals freshly prepared for immediate consumption from snack stalls or mobile snack bars or in cinema foyers is a supply of goods rather than service – as long as the supply of services preceding and accompanying the supply of the food were not predominant.

Ostensibly, this did not apply to the UK – or so HMRC said at the time. Yet the Fish Fryers Federation and others disagreed, because the essence of the ECJ judgement was that they were supplying goods (as in foodstuffs), not services. And as the UK zero rates food, they were thus salivating at the prospect of a mega-refund.

“Ahah!”, said HMRC batting away such insolence. The fish fryers are caught either way. Their tax category – devised uniquely by the UK – includes “hot take-away food” and well as catering services. It matters not whether it is food or service, VAT still applies, regardless of Bog.

And there gripped the cold, mindless jaws of the VAT Sixth Directive, of which the ECJ had so cruelly reminded us. To their horror, HMRC have confronted their worst nightmare. If the fish fryers are selling hot food rather than services, and have to charge VAT on it, so does everybody else who sells hot food.

That’s right, Osborne had no choice in the matter.

Can we leave yet?

That budget then

So, George Osborne has delivered this year’s budget – or, more accurately, confirmed the press leaks of the last few days. Quite frankly one wonders why he bothered standing up.

I think it is safe to skip rapidly over the growth forecasts provided by the OBR as the record of their gypsy fortune-tellers predictions is poor to say the least.

Equally, the less said about his wish for a balanced economy the better. Wishing for it is fine but I’d be happy if the government kept its paws out of the matter* as much as possible and left it up to the free market to sort out.

Borrowing

As he stated back in the Autumn, the government will continue to live beyond what it steals from the taxpayer past the end of this parliament (assuming it goes the distance). Indeed it doesn’t forecast a ‘balanced’ budget before 2017/18. In the mean time the National Debt is forecast to increase by £126bn (2012/13), £120bn, £98bn, £75bn, £52bn and £21bn (2016/17). That is a whopping £492bn – and all of which may, one day, have to be paid back.

I say one day because as we know the traditional way for government to deal with debt is to inflate it away and in 100 years time it is more than likely that that £492bn will be a lot closer to chump change than it is now. Gideon’s wheeze for delaying the inevitable for as long as possible is 100-year or perhaps even perpetual (i.e. non-repayable) gilts.**

Public Sector

Sadly there was no announcement of an immediate end of national pay bargaining. The Chancellor did though appear to thank the opposition for suggesting the end of national benefit rates – perhaps the only useful idea to emerge from Labour in a while. It would also make sense to make the NMW regionalised (assuming it is politically impossible at present to scrap it entirely).

Taxes

Let’s face it, the only thing anyone really cares about is how much the government is planning on stealing from them in direct taxation each year. The stupidity of it is how pathetically grateful we all get when we learn that it might not be as much as last year… without realising that they generally claw it back through indirect taxation instead.

The apparent good news for anyone earning less than £100k is that the government has decided it won’t start its thieving in the forthcoming tax year until you’ve earnt £8,105 – and next year is pushing that level up £9,205.

Obviously this is a good thing for anyone earning minimum wage sort of levels. Personally I think it would be better if no-one doing a 40hr week at NMW (which currently works out to £12,646.40) paid any tax but things seem to be moving in the right direction. The test will be what happens once the £10k level, as agreed at the start of the collation, is reached.

The likely option is that government of the day will starting treating it just like they do the the other tax thresholds and allow it to increase slower than wages, thus once again catching more people in the net.

What the Chancellor didn’t mention whilst he was crowing about the changes to the 0% band was that the £630 increase there is mirrored by pulling the 40% threshold down by £630, shrinking the 20% band by £1,260. This ensures that – for those under 65 – that the the 40% band still starts at anything over £42,475. This is the same tactic that the one-eyed Scottish idiot employed on a few occasions.

Together with the lack of change of the levels at which the tax free allowance is withdrawn and the highest rate of Income Tax is levied, the government is once again ensuring that, as wages rise, more people are dragged into the higher tax brackets.

Unlikely those of us who are earning to try to keep ourselves in drinking money, those who have reached pensionable age will find their 0% band frozen from 2013. If I am to guess, this is in order to equalise them with the rates for the under 65s in preparation for the merger of Income Tax and National Insurance – something which will also hit pensioners as they do not currently pay NI.

The positive sides of merging IT and NI should be
a) simplification of the tax code, and
b) give the population a better idea of what the basic rate of tax (excluding Employer’s NI) is.

With any luck, being told that the basic rate is actually over 30% (rather than the 20% they believe) may result in the sheeple demanding that it comes down…

For those on very high incomes, the semi-good news is that the highest rate of income tax is coming down. Not yet scrapped altogether (hopefully in a future budget) but being halved. Given the flagrant avoidance that took place before the 50% rate come into effect – and which will be duplicated now as people who can hold off until 2013 – this can only be a good thing. Will 45p in the pound (and the potential direction of travel) tempt those who haven’t yet upped sticks to stay though?

Excellent news for companies employees, shareholders and customers is that corporate tax is coming down even further with the aim of getting it to 22% from 2014. Not quite Ireland but better than France and Germany which may encourage those financial institutions who were thinking of leaving before a Tobin tax in introduced in those places. The increase in the bank levy may however put them off.

The so-called sin taxes generally slipped by without change to already announced increases except for the price a tobacco***. I imagine that the only people who were cheering this rise of inflation plus 5% (plus consultation on making tobacco-free cigarettes liable to excise duty) were the smugglers. As a non-smoker I would be open to the idea of bringing back duty-free smokes for people when re-entering the country…

Regulation

As trailed, Sunday trading laws are to be relaxed during the Olympics. Hopefully they will then be scrapped altogether as an anachronism.

Planning – perhaps the major reason for the cost of housing being so high – is being simplified. Supposedly the guidance is being cut to just 5% of its previous size although there is no word of whether part of this has been achieved by the use of single instead of double line spacing and a reduced font size.

We are also getting more ‘enterprise zones’. Why not just make the entire country one?

And Michael ‘Tarzan’ Heseltine is back. Has anyone checked him for knives?

Infrastructure

It would seem that the Government has finally realised that we do need more (or bigger) airports. Will Heathrow be getting that third runway after all? We might find out come the summer.

Annoyingly (but not surprisingly) the Government will continue to waste money on ‘green’ energy but in better news looks to be reversing the hit it gave the North Sea oil and gas industry last year.

Conclusion

One thing that this is not is a Libertarian budget. Government spending is still going up and Peter, let alone Paul, is being robbed to pay Peter.

To the laywoman (i.e. me) it appears to be yet another budget that just tinkers with things whilst fleecing the public for more money – a speciality which Gordon Brown perfected. There is however some future potential in it if some things (the IT and NI merger, national pay bargaining) do happen. To mis-quote that school report line no-one ever wanted to see: “could do a damn sight better”.

* Yeah, I know. Government leaving alone is wishful thinking, huh? Let’s just be thankful he isn’t attempting to plan the economy.

** It is ideas like this which make me glad that I’m never going to have children.

*** Ok, gambling as well as tax will be imposed at point of consumption in an effort to stop online gambling moving offshore.