Although the Chancellor may have redrawn taxation boundaries, his Budget has done nothing to improve the outlook for growth and jobs, according to an influential HR body.
Dubbed by the deputy prime minister, Nick Clegg, as a ‘Robin Hood Budget”, John Philpott, chief economic adviser at Chartered Institute of Personnel and Development was sceptical, however.
“Although this is a budget that rewards work, it doesn’t, on the face of things, look like a budget for growth and jobs,” he said. “And if, once the fine print has been scoured over, it proves to be a ‘Robin Hood’ budget, it’s surely ‘Robin Hood lite’, with less for those not in work and the promise of perhaps an extra £10 billion of welfare cuts to come.”
In his Budget announcement, George Osbourne revealed that personal income tax allowances would be increased to £9,205 from April 2013 which, he claimed, would make 24 million people £220 per year better off.
At the same time, as widely expected, he said that the 50p rate of tax for top earners making more than £150,000 per year would be cut to 45p from April 2013.
A study undertaken by HM Revenue & Customs showed that the increase in the levy had raised only a third of the £3 billion promised and that the direct cost was only £100 million a year, the Chancellor claimed.
“In other words, it raises at most a fraction of what we were told – and may raise nothing at all,” he attested.
Giving with one hand
Thanks to other new taxes such as those that he now intends to levy on people selling properties worth more than £2 million, however, “we’ll be getting five times more money each and every year from the wealthiest in our society”, Osborne claimed.
But the claim was strongly denied by leader of the opposition, Ed Milliband, who said that, of the 300,000 people who would benefit from the top rate tax cut, 99% of them would be unaffected by the proposed housing tax.
But the 14,000 who earned more than £1 million a year would see their income tax cut by a huge £40,000, while those on £20,000 per annum such as nurses and lorry drivers would be £253 per year worse off – even with changes to the personal allowance.
“It’s giving with one hand and massively taking away with the other,” Milliband attested.
Whether they receive less or more, however, the UK’s 20 million taxpayers will receive a new annual ‘Personal Tax Statement’ from 2014, indicating how much tax and national insurance they have paid, average tax rates and how such taxes contribute to public spending.
This means the document will break down how much, proportionately, goes to fund the healthcare, education or welfare and how much is spent on servicing interest payments on the national debt.
