How is he getting away with this? Pt I

Every time I try to write a post about the current tax shenanigans I am distracted by something unspeakably dreadful. Sometimes it’s another gem from the Osborne Boy’s Book of 1950s Economic Homilies – “He didn’t make the jam while the rug needed a stitch in time and now the house is on fire. Quick, open the ginger beer!”. (Customarily, of course, metaphors are provided by a politician so that the public can grasp what’s going on; in this case I wonder if they weren’t provided by the publicity team so that the politician can grasp what’s going on. Sooner or later, George is going to want to see this damned house he keeps having to make announcements about.)

But above all, it’s this, blogged from the Number 10 press conference on Tuesday:

Brown says that they are already seeing tax cuts, such as the £120 cut going to basic rate taxpayers as a result of the decision to raise allowances.

That’s right. The fudged solution to a problem that Brown created by axing the 10p tax band is now a “tax cut”.

It is a truth universally acknowledged that the point at which you are finally sick of talking about something is the point at which you must not give up, so I crave your indulgence as, by way of a public service, I drive yet another nail into the 10p debacle. No-one anywhere in the blogosphere must be left in any doubt about what an insupportable lie the above constitutes. It’s a technocrat lying to people who don’t have the specialist knowledge to check the facts, and it is thoroughly sickening. From the top, then:

In 2007/08, someone earning £14,000 would have enjoyed their first £5,225 tax free. Then a block of £2,230 would have been taxed at 10% (£223, would you believe). The remaining £6,545 (14000 – (2230+ 5225)) was taxed at 22% (£1439.90). Their tax bill for the year would have been £1,662.90. Assuming they had no children, they would not be eligible for tax credits.

The initial 2008/09 changes raised the tax free portion to £5,435 (in line with inflation, as is usual with the tax free allowance). But the whole of our £14,000 earner’s salary above that level would now be taxed at 20%. This gives a tax bill for the year of £1,713.

Following the outcry, by way of a “solution” the tax free portion was raised by a further £600, to £6,035. Effectively this means 20% of the £600 is recovered by the taxpayer – that’s the £120 Brown keeps talking about. It brings our £14,000 earner’s tax bill back down to £1,593, below even the 2007/08 level. All well and good.

But there is a point in the salary scale below which the £120 does not make up the loss of the taxpayer when the 10p band disappeared. Consider someone earning, say, £7,455 (what was formerly the top of the 10p band – £5,225 plus £2,230). From having had most of their salary tax free and a small upper quarter taxed at 10%, they suddenly found that they were paying 20% on that upper quarter. Their tax bill almost doubled in real terms from £223 to £404 (£7,455 less the new tax free allowance of £5,435 gives £2,020, which is taxed at 20%). Getting a hundred and twenty pounds back only about halves their loss. It doesn’t commute the loss altogether.

The break-even point, the point at which the taxpayer lost more than £120 by the axing of the 10p band and so did not have their loss fully commuted, is a salary of around £10,500. Or, as it’s sometimes known, the annual equivalent of the minimum wage. On that salary, a worker who paid tax of £892.90 in 2007/08 was originally destined to pay tax of £1,013 under the initial 2008/09 arrangements. The revised arrangements bring that sum back down to £893. Below that level, even the emergency hike of the tax free allowance to £6,035 does not entirely wipe out the loss that resulted from the disappearance of the 10p tax band.

How did it happen? It still staggers me. The party of the working man, doubling the tax on some of the lowest paid people in the country, and then even when their mistake was pointed out to them, failing to make up for it. What kind of heartless, gutless cheat do you have to be to not only go through with the initial abomination, not only brazen it out when you’re discovered, but later on start referring to it as a successful tax cut.

I’m told (she said primly) that the word on the inside is that Brown knew perfectly well what he was doing when he got rid of the 10p tax rate, but reckoned that the higher earners would be sufficiently self-interested not to make a fuss about the poor low-paid losers. His original aim was to bring in the package in March, become Prime Minister in the summer and call an election in the autumn at which the grateful beneficiaries of the 2p tax cut would sweep him to a mandate of his very own. He kept the 2007 budget from Blair’s final sign-off until the last possible moment. Blair noticed the problem and queried it. He was lied to in much the same terms we were – it won’t be many people and anyway, they’re all on tax credits. He shrugged and waved it through; Gordon’s problem, not his.

If that account is anything like true, Brown’s a lying bastard. And I wouldn’t attach so much credence to the lying bastard scenario if the alternative wasn’t – if anything – even more outlandish, that Brown and his advisers and everyone else at the Treasury were too stupid to notice the problem. There is just no way they are unable to carry out the simple calculations I’ve sketched out above. Next time he talks about the £120 “tax cut” he gave people on middle incomes, remind yourself of the full deceitful horror of its provenance, and the million people earning between £6,035 and £10,500 who are still taking home less than they were last year. And now they’re facing the recession as well – his recession. He must not be allowed to get away with this.

16 Comments

  1. People earning more than £14k have had a double tax-cut. They benefited from both the shift from 22% to 20% and from the raising of the personal allowance.

    I am in this group, and I have to admit that I didn’t notice Brown’s tax cut in my pay until I went back over them this week after tax was back in the news. I suspect that many people are the same: they just hoover up these tax cuts without noticing… we are a few quid better of a month… so what? I can’t believe this makes much difference to the way the middle class vote. Tax cuts would need to be much more meaty to get people’s votes.

  2. Let’s not forget that thanks to successive governments, especially Thatcher, the working class pay very high indirect taxes. To their credit, the Labour left have taken their stand against VAT, but regrettably the Bob Piper wing of the party is resolutely ignored at all times.

    It is a fucking disgrace that professional cunts & scum like Camoron want to have no restrictions on unearned wealth for themselves & their mates, while the inhabitants of my estate will generally get no inheritance at all but are toiling in low-paid jobs, with a conspiracy of the Labour cunts & the “men” from Bullingdon make them pay through the nose for the necessities of life.

    Why, frankly, would people bother trying to create a better life for themselves & their children? We know that you’re better off leaving people on low incomes with their own money, so why is this cunt planning to abolish IHT & carry on making our simple food & drink more expensive than the market makes it, instead of getting his priorities right?

    It fucking IS about class, & can you really blame me for seeing red when people like Laurence Boyce who are generally sensible fall for Tory lies on the issue?

    I can see the argument against IHT that it wouldn’t work very well as people would pass on their wealth to their children in life, so it might end up more trouble than it’s worth. But if fuckers sit their spouting shite that they call a moral argument, without denouncing shite like VAT & the tax credit system, they are knobheads.

    PS-
    This, & your last post, presents a golden opportunity to offer a small state to people who are badly off. Let’s have reductions in the size of the government without alliance to privilige at all, & thejn it will be popular as the people in the Bull’s Head (where I would be now, had I some money) relate it to their own lives.

  3. As one of those who is worse off: what Asquith said. Although possibly with less deleterious references to female genitalia. I quite like my genitalia, and don’t want it associated with the likes of Cameron.

  4. So you are saying that of the potential reasons for his decision it is more likely than Brown lied than is plain stupid and negligent.

    Well, for anyone to lie in such a way as that represents such callous disregard for humanity and reality that their deceit is only matched by their ignorance.

    So while I’d say yes, it is more likely that Brown lied than is just plain stupid, this is actually twice as bad because to lie is to be maliciously stupid, not just dim-witted.

    What, didn’t Brown think he’d be found out?

  5. Err, perhaps too pithy just then, but you’ll get my drift. The man says things in plain view which are simply NOT TRUE, have no evidential basis, and fly in the face of all available data. He gets away with it because of fucktarded tribal NuLab toady-drones who’ll bray approval enough to drown out the sound of those suggesting what the truth might be, and his godforsaken cheerleaders in some corners of the press.
    Truth to Brown is disposable, power is all.Doing anything decent or noble with that power doesn’t enter into the equation, just the preservation of his status and prestige.

  6. This and your Jacqui Smith demolition are worth more to me than a year of all the political print media combined. In literary terms, you’re beautiful when you’re angry. In most writers anger creates energy and noise: in you it sharpens your scalpel and lets you carve exquisite patterns on the bleeding hides of those whose cynicism offends you.

  7. Bugger. I meant your Blears demolition, not that or Jacqui Smith – though the collateral damage against la Smith in the same piece was much appreciated.

  8. Whoops! Iain Dale told me to come here. There’s a lot of swearing isn’t there? Apart from that, Alix, I thought your basic premise that Brown is a lying ….thingy (I can’t bring myself to use the word) was spot on. The sooner someone says this to his face the sooner we can get this deceitful and bogus so-called economically guru out of our lives. He has to got go – he’s caused too much damage to so many people’s lives.

  9. “If that account is anything like true, Brown’s a lying bastard”

    perhaps not quite fair. I submit that he has the capability to believe something is true at any given moment /simply because he is saying it/. ‘Lying’ is saying something that you know to be untrue, the former is a trait that seems to be found in above average concentration in politicians.

    It’s also a common symptom of another group. Can’t remember precisely which, but they have the suffix ‘path’ in there somewhere.

  10. I congratulate you on your analysis. The only dissenting note I would introduce is your description of Blair’s reaction. As seen on TV (!) he leant over to Brown with his trademark grin waxed into place and patted his arm. Hardly a sign of dissent.

    As a tax adviser, my reaction to the Budget was one of disbelief. A man who tells us that child poverty is his main reason for being in politics plunges them further into poverty just to wrong foot the Tories. May he rot in Hell.

    Equally, I could not believe the Tory reply. Anyone with a brain could see what Brown had done but politicians of every stripe completely missed it. It took 6 months for it to permeate into the increasingly irrelevant world of Westminster.

    Even now, the fact that Brown has not remedied his attack on the poor is not a subject for debate. The media, the politicians, the public, none of them care about the poor, except in a Righteous way (HT Leg Iron over at Old Holborn).

    And that, Alix, is why they can get away with it. No-one cares. Hilariously, one of your commenters blames this on Thatcher, in the way that Christians tend to blame the devil. Their hero cannot rectify the problem, indeed makes it worse, so let’s drum up a hate figure to blame.

    So the current Party can always blame someone else, but they have created their client state who will vote for them come what may.

    Do you remember the old conundrum of counting – lampposts and gaps? Don’t get mixed up when we need to order the hanging ropes…

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