21 March 2007

Regressive Budget!

I said on my last post that I would like to abolish payroll taxes for those earning the minimum wage. Incredibly, Gordon Brown has just doubled the marginal rate of income tax for some minimum wage workers from 10% to 20%. There will be many low earners who have just had their income tax bill doubled!!! His "cut" has increased income tax liabilities for almost anyone* earning more than £5,000 but less than £17,935.


This table shows the impact of the 10% rise and 2% reduction on people who have reached this break-even point. Nobody earning less than £17,935 is better off as a result of this budget and that will include most part-time workers. Whilst I would normally applaud simplification of the tax system, this move is very regressive. Poor show, Mr Brown.

*exceptions due to different personal allowances do not change the overall picture.

7 comments:

JRD168 said...

Reading a little more into it, I think your view may be a little hasty. There are tax credits to consider for example affecting many part time workers. I've take nthe post on my site down, and will post again tomorrow when I've had a read through the inevitable budget specials in the papers.

Praguetory said...

Tax credits are a benefit.

Anonymous said...

Quite right praguetory tax credits are a benefit. Lots don't qualify, lots don't want to go cap in hand to the nanny state. I know people earning £8-9K a year who don't qualify for any benefits and who've just seen their tax bill double. Shame on Labour and this attack on the working poor.

Damon Lord said...

THe BBC Budget Calculator says I'm £34.82 better off for the next year. Any idea what I'll spend it on? Council Tax increases, probably.

Calculator here: http://news.bbc.co.uk/1/shared/bsp/hi/business/budget_calc/html/budget_calculator.stm

Praguetory said...

Oddly the calculator says it doesn't reflect the income tax changes, but changes appear in the calculation.

JRD168 said...

Yes of course tax credits are a benefit. my point is that they distort the simplified version you have worked out in your spreadsheet. I quote for example the BBC site:

"Other tax and benefit changes, including increases in working and child tax credits, would mean that the point at which a family with two children started paying income tax would rise from £22,500 a year to £24,250."

As I said, I'm going to hold back until I've read further. Few things though are as simple as they seem...

Praguetory said...

Wouldn't it be better if instead of low earner's cash being taxed to the hilt and then forced to beg for it back, it stayed in the worker's pockets? Why are people on benefits paying tax and vice-versa? What a waste. Check out my post on supertax.