I am getting the jitters, and I am not alone. Everyone I talk to has them too. In a couple of weeks we’ll have a Budget which has been long awaited with no small amount of trepidation. On October 30 we’ll know what Rachel Reeves, the first female in eight hundred years’ worth of Chancellors of the Exchequer, has up her sleeve.
Recent Budgets have been relatively tame affairs. The emphasis has been on steady-as-she goes. Don’t rock the boat. Don’t frighten the horses. If we believe the febrile media commentary, there are going to be a lot of capsized boats and bolted horses. In reality, none of us is any the wiser. What we do know is that Britain’s finances, as with previous budgets, are incredibly tight. There are immense demands on the Exchequer, chiefly as a result of the relative sickness of our workforce.
Covid still haunts us. Hardly a week goes by and we don’t hear of someone testing positive again. Thanks to the immunity offered by vaccinations, symptoms are in the main mild, but the debilitation is often enough for the sufferer to take some days off work. Then there are the long-Covid suffers, those who have never gone back to work, over two and a half million, if we are to believe the stats.
It's the same all over the Western world, not exclusively in Britain. However, we seem to struggle more. The problem with having a fifth of the potential workforce “on the sick” is not just that they’re not working and therefore not paying tax, but that the majority are in receipt of benefits which come primarily from those who are still working.
“All we are saying is that we want those with the broadest shoulders to pay a little more,” say MPs, helpfully rolling the pitch” for the pain to come. “Who can be against that?” The trouble is those with the really broad shoulders, in an increasingly connected world, can choose to pay less tax elsewhere. Half a million pounds will buy you citizenship in any number of warm jurisdictions where you won’t be troubled by much tax. The Pimlico Plumbers founder, Charlie Mullins, has already walked with much trumpeting. Others such as the country’s favourite businessman (inexplicably to many in business) Sir Richard Branson made that decision nearly two decades ago when he moved to Necker in the Caribbean.
It's those of us who remain, the squeezed middle classes, who’ll shoulder most of the added tax burden. Perhaps this time the pips really will squeak, as former Chancellor Denis Healey demanded 50 years ago, although then he was talking only about property developers. Individual tax burden is higher than it’s ever been. It’s about the total tax take. Rachel Reeves has telegraphed “a Budget for growth.” Our economy is “consumer based”. Tax is a break on spending because if you don’t have it, you can’t spend it.
VAT is the real killer. Fifty years ago, VAT replaced Purchase Tax at a modest 10%. It’s now double that. A recent bill for some simple but necessary plumbing at home resulted in a bill for £720, £120 of which goes straight to the Treasury.
Our High Streets are boarded up eyesores, thanks in part to Business Rates. Successful shops can find themselves paying an effective tax rate, combining Corporation Tax with Business rates, of 65%. A radical budget for growth could see a downward tracking of VAT and rates. I am not holding my breath.
Finally, am I the only one struck by Rachel Reeves change of image a few weeks ago? She binned her rather austere Black Widow look, dyed her hair red and announced her new look sporting a bright red blouse. Channelling her inner Angela Rayner? Perhaps, but in the run up to a Budget I prefer my Chancellors to be in the black rather than the red.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel