Goodbye to the tax Disc

 

So we are going to see the end of the Tax disc in October. Personally I have thought it outdated for quite a while now and in fact when I ride a motorbike I very rarely rode with my tax disc on show and in all the years I rode I never once was asked for it. (And in fact to be honest even in the car it was normally a month or so before I managed to get the disc into the car.)

I think perhaps the more interesting announcement by George Osborne was that you can now pay your road tax (I know - Vehicle Excise Duty) by monthly direct debit, surely this is great news for people on a lower income as I always remember the stress of trying to come up with the money to pay my 6 month road tax which quite often amounted to a couple of weeks wages and so was not exactly easy to come by.

George Osborne Awarded Briton of the Year???

So the Times today announced George Osborne as Briton of the Year 2013 thanks to the economic recovery he has "brought about" I'm afraid I can't agree with this as all actions taken by politicians cause harm to the economy the best I can give him is that he "may" have caused less problems than someone else, but then that can't be proven one way or the other.

It has been pointed out that the award is likely to be motivated by politics coming from The Times who are not exactly anti-Osbourne but it's no different than the Guardian giving the person of the year accolade to Snowden, someone they helped risk lives for the sake of circulation rather than freedom.

So who would I have picked? To be honest I can't really think of anyone who had a stand out year, I guess that is to be expected after all the heroics of 2012 but if I had to give it to someone it would probably be Ed Miliband for standing up almost every week at Prime Minister's Questions even though he is clearly going to be exposed as rather simple yet he keeps getting up, he really is an example to us all on tenacity.

The Budget Cuts have Landed

Well the cuts are out there, well to be honest the actual details will be coming out over the next few weeks but we know the kind of cuts we are looking at.

Immediately the usual complaints started, The Unions asked why the Public Sector were the hardest hit, Labour asked why young families were the hardest hit, Age UK asked why pensioners were the hardest hit, Disabled groups asked why the disabled were the hardest hit - all whilst at the same time it actually turns out that the top 2% are actually the hardest hit and the top 15% stand to be 10k a year worse off. On top of all this several analysts have actually come out suggesting that Osbourne has not gone far enough. So what does this all mean?

Personally I think that this is probably proof that the cuts are, as Osbourne has been saying, spread across the board surely if everyone is complaining (Well not the middle class as after all there is no one to speak up for the silent majority.) then it means that the cuts are spread out.

Now obviously there are going to be complaints that the poorest are the hardest hit, but as I posted previously that is unfortunately unavoidable, when the country has run out of money it will be the people who are net costs to the state who will be hardest hit. It is very simple maths, if you receive more money from the state than you give then you will be at risk, for those of us who are net contributors then we will simply have to give more, there is a clear limit to what the government can withdraw from me and that is limited to Child Benefit as that is after all the thing they give me, in actual fact it goes to my wife so personally the government can not withdraw anything from me as they do not give me anything in the first place.

The only question that remains to be asked of the government is can they get all of the disparate groups who are feeling like the victims to see the suffering that is being spread around. If the coalition can not give a sense of empathy to the public then we may see that, as predicted by Socrates over 2300 years ago, Democracy is doomed to fail. Socrates stated of the Athenian Democracy Project that Democracy is always due to fail as the demos will always vote in their own interest at the expense of society, eventually resulting in a society which is unable to support itself (Sound familiar?)

Unemployment Rises make (Bob) Crow's Day

A leaked presentation seen by the Guardian has announced that there may be a 1.5 Million rise in unemployment from the Public Sector. Now to deal with that first even the Guardian have admitted that the (Independent) Office for Budget Responsibility have said that the Private sector should create 2.5 Million jobs in the same period. These seems like typical Best Case/Worst Case politics, I would imagine therefore that we have to look somewhere in the middle to find the truth, supposing that without the Public Sector millstone round the nations neck the public sector should be able to create 2 million jobs, but there will probably be an increase of around 1/2 a million unemployed from the cut backs. However the main question here is how many people would have been made redundant had George Osbourne not decided to cut quick and fast? I have always believed that if the public debt got to 1.5 Trillion that it would have necessitated the near collapse of our public economy with a near total paralysation of our Private economy - surely a much higher level of unemployment would have followed.

So despite the fact that the case for these figures is in no way proved RMT Leader Bob Crow has called for a summer of wide spread strikes, he has called for all unions to join together with community groups to have full disruption to society. Now Bob Crow is considered one of the more extreme Union leaders (which could explain why the Train Drivers are constantly on strike - £30,000+ for sitting down holding a handle?) but I think this shows the typical arrogance and selfishness of the Union movement.
"WAKE UP, THE COUNTRY IS ON THE BRINK OF COLLAPSE"
This is not the time to try and destroy the economy, this is the time to pull together and work to try and undo the damage of 13 years of the worst financial management

The Emergency Budget Has Landed

Well the budget is out and the usual childish debating has started in Parliament, there were few shocks in the budget with the possible exception of the fact that many commentators believed that the recent warnings from the Chancellor and other key figures were softening us up for a budget which would then look tame in comparison. However I think that this Budget really is the first step towards the pain we will all have to bear in the coming years, however if Mr. Osbourne is to be believed (And I have no reason not too.) then in just five years we will be looking at a balanced budget, this is much quicker than Labour suggested and considerably quicker than even many Tory supporters thought were possible, before you get excited though, obviously this is simply the point at which the government can start to work on clearing the massive debt that it will owe, but luckily that should be less than the 1.5 Trillion that labour wanted us left with. (£1,500,000,000,000 – I feel it is good to see it written in numbers in case we forget what a really large number it is.)

Like everyone else I do not want to take the pain that is coming up, and with only one income coming in and a young baby at home it will be a real struggle, but if it means that within 5 years we can start attacking the debt and dare I suggest that within two parliaments (As long as Labour don’t get back in.) we could be approaching a debt free country. We may even be able to start investing in things again.

Anyway the headline figures of today’s report are:

Increase VAT 20%
Widely expected, and a good tax to bring in extra revenue as unlike income and capital gains it is very hard to avoid, I also think it is a fair tax as it works on what you spend, therefore if you have a lot more money you will most likely spend more and as VAT is a percentage of price you will pay more. I know that Labour are saying that it is an unfair tax on the poor (As they spend a higher percentage of their money) but at the end of the day the Rich have already had a 10% increase of higher tax rate.

Two year pay freeze for Public Servants paid over £21,000
This may bring out the strikers this summer but I think it is fair, my Company have struggled with cash flow recently and a pay freeze has been mentioned, again it is not nice but it may have the effect of reducing inflation as we try and get out of recession. I have to admit that I thought £21,000 was a low threshold as after all if you only have one income this is hardly a great wage, but I guess that is what is meant by sharing the pain.

Housing Benefit a Maximum of £400 per week
I am slightly shocked that Housing Benefit was being paid out at a rate over £1800 a month anyway. I guess this will make it hard for the Express and Mail reporters in coming months as “Immigrant living in luxury gets £X a month in housing benefit” has been a regular shock feature over the last few years. Personally I have often advocated that social housing should not come in larger than 3 Bedroom houses. (I know this will anger a few people.) But surely 1 room for Adults and 1 each for Boys and Girls is all you really need?

Parents back to work when youngest child starts school
I do believe that getting parents back into the workforce quicker is a key element to financial stability, Personally to achieve this I would like to see universal free child care, but I guess instead they will simply look to force parents back into the workforce when their youngest is 5, I have a cynical feeling this may lead to an increase in 4 year age gaps between siblings. (As the current system has increased the amount of siblings born over 16 years apart.) Well as long as there is a marked increase in jobs available where the hours are between 10am and 2pm I guess this will work.

Extra £2bn a year tax on the banks
I guess this was inevitable as the Banks are the villains of the 21st Century, I think the amount mentioned will be easily absorbed by the banks (rather than being passed on to us.) As a general rule I do not like a tax that picks on a particular industry as they always seem like petty vengeance for alleged wrong doings, after all I would argue that the “credit crunch” would never have happened if people were not so greedy that they took money they could not afford. However blaming the Banks stops people having to reflect on themselves.

There were also a few small bits of good news

Raise Personal Allowance
The Personal Allowance is going to be increased, This is a incremental step on the way to the Lib Dem election pledge to raise the threshold of Income Tax to £10,000, this will obviously help all tax payers but obviously will mean the most to the lower rate tax payers so should be some help to the less well off.

2 Year Council tax Freeze
This will help all council tax payers, and along with the Public Sector pay freeze (Without which it would probably not be possible) and no increase on Fuel duty should have an effect to keep inflation under 3%. However when you look at the percentage of tax that is actually council tax, it is really just a token gesture.