I did this yesterday, partly for some economics work and partly to bring up the debate of tax and the economy within my clan
Thought some of you guys might want a read, although be warned, it's rather long. If no one replies after today, i'll delete it
Today Alistair Darling presented his first budget to the country, with a mostly negative response.
For non-UK people basically the budget is when the government (or more precisely the Chancellor of the Exchequer) decides what changes they are going to make to the economy for this year and sometimes for the years to come. The key way they do this is through the increases and decreases of tax, depending on what they think will help not only the economy but also the country; health and social objectives are also taken into account.
Many expected this budget to be a pretty dull one: with it being Darling's first budget, it was expected to only make minor or expected changes, and nothing too dangerous. Those people were generally right, with most of the changes being small and safe.
However there is still much that can be commented on.
As usual there were hefty increases in tax on de-merit goods such as smoking and alcohol, the latter in particular a half-hearted attempt to cut numbers of 'binge drinkers'. In an attempt to stop the under-production of housing, 70,000 new sites for houses have been identified as well as assistance for first-time buyers to get on the housing ladder, by more fixed-rate mortgages being available.
There were also many environment-related changes. In something Nick Clegg (leader of the never-to-be-in-power-in-our-lifetime lib dems) called a "green cop out", road taxing will be overhauled in 2009 to support low emissions vehicles compared to cars of the highest level of pollution being taxed the most.
Other 'green' policies are the government giving £26 million to make homes greener, laws to tax plastic bags unless shops do more to charge for their use, and the consideration of raising the country's targets for cutting emissions to 80% by 2050.
There is some good news for businesses though. Corporation tax (tax paid on profits) decreased by 2% to 28%, and capital gains tax is staying at 10%, which is especially good for small businesses.
Education-wise things are looking good for schools, with £200m being put aside to help rise GCSE results and £30m to help improve teaching of science. Poverty however is a mixed bag, with only small changes being made to try and help poor families in particular.
One thing that has not been mentioned however is the changes that are coming into effect this year, that were announced last year. This is the clever trick that Gordon Brown has been playing in the last few budgets: Announce changes that will receive heavy criticism the year before they are set to come into effect, as this way people forget about them by the time they are active. An example of this trick this time around is changes to the workings of national insurance. The details are complicated but it means my father's national insurance is set to increase in excess of £500, however was it mentioned? No.....
What do all these changes mean for us?
The increases in car tax, alcohol and other necessities are pushing up the cost of living, which is not good. Also, the budget has been criticised for being kind to the rich, because of the lack of increases in progressive taxes (ones which tax the rich more than poor as in income tax) and more increases in regressive taxes, such as those on petrol ( will not come into effect until October) and alcohol.
Personally I think Darling is unlucky to have to produce this budget at this time. The economy as a whole is on unsteady ground and this is not his fault, but the labour government as a whole. When they got into power a decade ago they came in with most of the country's coffers in good shape. 10 years later, through wasting money on the inefficient NHS, the suspect wars and over-spending in general, government and national debt is at all time high and this country is showing the early signs of a looming recession. This is only made worse by the government spending too much too early - any economist will tell you that you should spend less when the economy is strong; spend more when the economy is weak. But the government has already spent that money, from trying to keep everyone happy. You could say that Darling has made the best of a bad situation: the incentives for small businesses and subsidies for key parts of the workforce will hopefully help to keep the country going, however this may be too little too late. This borrowing burden will be placed on the workforce of tomorrow; let's just hope it doesn't break under the strain.
Summary of what the budget actually did:
Delay 2p rise in fuel duty for six months
6% increase in alcohol tax - with 2% above inflation rise for each of next four years
4p on pint of beer, 3p on cider, 14p on wine, 55p on spirits
11p on packet on 20 cigarettes, 4p on five cigars
£950 higher first year rate of road tax for most polluting cars
New top band for the most polluting vehicles that emit more than 255g of carbon dioxide per kilometre
Air passenger duty scrapped in favour of flight tax
Winter fuel payment up to £250 for over-60s and to £400 for over-80s
Require supermarkets to charge for plastic bags if they do not scrap them
More cash to tackle child poverty
Help with rising energy costs for poorer families
Also check here for more info: http://news.bbc.co.uk/1/hi/uk_politics/7291841.stm
Thought some of you guys might want a read, although be warned, it's rather long. If no one replies after today, i'll delete it
Today Alistair Darling presented his first budget to the country, with a mostly negative response.
For non-UK people basically the budget is when the government (or more precisely the Chancellor of the Exchequer) decides what changes they are going to make to the economy for this year and sometimes for the years to come. The key way they do this is through the increases and decreases of tax, depending on what they think will help not only the economy but also the country; health and social objectives are also taken into account.
Many expected this budget to be a pretty dull one: with it being Darling's first budget, it was expected to only make minor or expected changes, and nothing too dangerous. Those people were generally right, with most of the changes being small and safe.
However there is still much that can be commented on.
As usual there were hefty increases in tax on de-merit goods such as smoking and alcohol, the latter in particular a half-hearted attempt to cut numbers of 'binge drinkers'. In an attempt to stop the under-production of housing, 70,000 new sites for houses have been identified as well as assistance for first-time buyers to get on the housing ladder, by more fixed-rate mortgages being available.
There were also many environment-related changes. In something Nick Clegg (leader of the never-to-be-in-power-in-our-lifetime lib dems) called a "green cop out", road taxing will be overhauled in 2009 to support low emissions vehicles compared to cars of the highest level of pollution being taxed the most.
Other 'green' policies are the government giving £26 million to make homes greener, laws to tax plastic bags unless shops do more to charge for their use, and the consideration of raising the country's targets for cutting emissions to 80% by 2050.
There is some good news for businesses though. Corporation tax (tax paid on profits) decreased by 2% to 28%, and capital gains tax is staying at 10%, which is especially good for small businesses.
Education-wise things are looking good for schools, with £200m being put aside to help rise GCSE results and £30m to help improve teaching of science. Poverty however is a mixed bag, with only small changes being made to try and help poor families in particular.
One thing that has not been mentioned however is the changes that are coming into effect this year, that were announced last year. This is the clever trick that Gordon Brown has been playing in the last few budgets: Announce changes that will receive heavy criticism the year before they are set to come into effect, as this way people forget about them by the time they are active. An example of this trick this time around is changes to the workings of national insurance. The details are complicated but it means my father's national insurance is set to increase in excess of £500, however was it mentioned? No.....
What do all these changes mean for us?
The increases in car tax, alcohol and other necessities are pushing up the cost of living, which is not good. Also, the budget has been criticised for being kind to the rich, because of the lack of increases in progressive taxes (ones which tax the rich more than poor as in income tax) and more increases in regressive taxes, such as those on petrol ( will not come into effect until October) and alcohol.
Personally I think Darling is unlucky to have to produce this budget at this time. The economy as a whole is on unsteady ground and this is not his fault, but the labour government as a whole. When they got into power a decade ago they came in with most of the country's coffers in good shape. 10 years later, through wasting money on the inefficient NHS, the suspect wars and over-spending in general, government and national debt is at all time high and this country is showing the early signs of a looming recession. This is only made worse by the government spending too much too early - any economist will tell you that you should spend less when the economy is strong; spend more when the economy is weak. But the government has already spent that money, from trying to keep everyone happy. You could say that Darling has made the best of a bad situation: the incentives for small businesses and subsidies for key parts of the workforce will hopefully help to keep the country going, however this may be too little too late. This borrowing burden will be placed on the workforce of tomorrow; let's just hope it doesn't break under the strain.
Summary of what the budget actually did:
Delay 2p rise in fuel duty for six months
6% increase in alcohol tax - with 2% above inflation rise for each of next four years
4p on pint of beer, 3p on cider, 14p on wine, 55p on spirits
11p on packet on 20 cigarettes, 4p on five cigars
£950 higher first year rate of road tax for most polluting cars
New top band for the most polluting vehicles that emit more than 255g of carbon dioxide per kilometre
Air passenger duty scrapped in favour of flight tax
Winter fuel payment up to £250 for over-60s and to £400 for over-80s
Require supermarkets to charge for plastic bags if they do not scrap them
More cash to tackle child poverty
Help with rising energy costs for poorer families
Also check here for more info: http://news.bbc.co.uk/1/hi/uk_politics/7291841.stm
Last edited by Fosterthelegend (2008-03-13 11:01:37)