One consequence of progressing from obscurity to semi-obscurity (yes, it’s been spectacular) is taking the Budget ever more seriously, in case some misguided soul asks for my opinion. I need to stay informed. So, what do people think will be the headlines?
This is what I have gathered so far, in haphazard fashion*:
Despite more in the kitty than expected, Darling is not expected to do many blatant giveaway. I think this basic judgement may have politics on its side, if not economics; people are approaching that further-sighted ”Ricardian’ point where they would discount the value of any goodies-today, so (rightly) fearful are they of future austerity. The risk of looking irresponsible silences the attractions of seeming ‘generous’**
Jeremy Warner wonders if Darling will nick some Lib Dem ideas.
If you want a few choice bits of SpeakYourBranes libertarian angry expat Lunacy, check out the suggestions elicited from the Telegraph’s furious fanbase; I love Keith’s:
For the 2010 budget I would:
1/ end final salary pensions for all state employees with effect immediately.
2/ reduce the budgets of the NHS and Education departments by 10% per year for three years. Expect the heads of those departments to reduce their salary bill by more than 10% each year.
3/ reduce budgets of all Quango’s by 50% in first year and demand a year on year reduction in the overall spending by Quango’s.
4/ During the next year have legislation in place to reduce the number of MP’s by 50%.
6/ reduce the tax burden on motorists by stopping the fuel duty increases, seek to reduce local authorities power to impose parking fines and taxes.
More sensibly, the Telegraph itself has a list of Unlikely’s: no new nondom charge, no more car taxes, no extra VAT or NICs. But perhaps some changes to CGT, some squeezing of Drinks ‘n Fags.
I strongly doubt anything like a Robin Hood Tax will be brought in. Let’s not get boring about why.
III have other ideas for phasing out the difference between upper rate tax (now 50%) and CGT:
Matt Coward, director of private client tax services at PKF, believes Darling could announce a CGT rate as high as 25% or 40%. “However, if the chancellor takes a more subtle approach, he might phase out the annual CGT exemption for individuals on high incomes or introduce rules to tax gains made over a short period as income,” he adds.
Andrew Grice in the Indie has an entertaining dissection of different Tory and Labour narratives about the Budget, and their contrasting views about what the public are most afraid of. I should read more Grice. But I don’t quite follow his thinking when he says that Labour want to contrast their ‘optimism’ with the Tories’ ‘austerity’. If Labour are optimistic about the economy, then surely they can afford to be austere without fearing for the economic consequences of cutting too soon? That has been their main defence of their wait-and-see position. Surely, they need a little fear and pessimism – whereas the Tory plans for cutting are truly torpedo’d by another dip into recession. In a weird way, the Tory position is crazy optimistic – don’t worry, we’ll cut like nuts and only the state-dependent need to fear.
OR: is the thinking, “Labour think the economy is recovering so fast that the deficit will fall fast anyway without cuts”?
The Times has a collection of expert opinions. It may be a phoney war, though one sees this further assault on the high-income-earners:
At the moment, individuals start losing part of their personal allowance once they have earnings of more than £100,000. Mr Darling might be tempted to bring down that threshold to pull in more tax from higher earners
Plus a raft of anti-avoidance measures, against which it is hard to argue.
The Times anticipates far more tax raising – such as CGT to 28pc – in the real Budget after the election. Mike Saunders of Citigroup wonders perversely if a good Budget now will increase nervousness about a Hung Parliament.
The Standard has 10 predictions. Many are already above, but they add more help for unemployed youngsters, and the vague expectation that Darling will ‘enhance’ tax credits to help the poorer.
*mostly Telegraph first, because their ****ing website keeps overloading this netbook and I want to close Telegraph tabs asap.
**I always find the concept of generosity, when it is not your own money, difficult.