Let’s look at the smaller frauds in this budget. Osborne will announce more of the low-paid to be lifted out of tax: that sounds so admirable that the former Lib Dem minister Chris Huhne, writing in the Guardian, quarrelled with Osborne over which coalition party deserves the credit for what they both know is a synthetic policy. As Resolution Foundation research shows, 5 million of the low-paid get not a penny more. Only 10% of the high cost of this policy goes to lifting anyone out of income tax. Only 15% of the money goes to anyone earning less that the £26,000 median, the rest all goes up the scale to above-average earners. Universal Credit sees every penny of a tax cut taken away in lower credits. National insurance kicks in at £8,000 and is more regressive, yet Clegg wants the tax threshold raised yet more, positioning the coalition as egalitarians. The staggeringly reckless cost is £11bn a year: if genuinely spent on low-income families, it might have avoided the extra 700,000 children descending into absolute poverty that the IFS predicts by next year.
Ex-chancellors Lawson and Lamont join the Daily Mail in protesting against raising the personal tax allowance on the lower paid – but not for the right reasons. They want the “middle classes” on £41,866 to be saved from being dragged into the 40p tax bracket. We must presume ex-chancellors are not innumerate, in which case they must know what they say is balderdash. Those recently pulled into paying 40% are still gaining more through the rise in their personal tax allowance than they lose from paying 40p on the top small slice of their earnings.
But the point of the two tax changes together is to lift some of the burden of taxation on the low paid and put it instead on the shoulders of the well paid. That’s what the lowering of the 40p rate (through fiscal grad) and the raising of the personal allowance (to compensate for past fiscal drag) is all about. It’s actually a unified and deliberate policy.
It’s entirely possible to disagree with it, fer sure, but do try to realise that it is indeed planned.