Saturday, 31 March 2012

Blogging

Apologies for the lack of blogging recently - I have been a bit busy. I have just finished my first novel, which I'm rather proud of. 105,000 words, and 206 A4 pages. It took an hour to print off on a laser printer!

Blogging will be resumed in due course - I haven't had a decent rant for a while. Although, to be honest, the way the government's going, it's more like despair than anger... they generally have good ideas, but serve them up half-baked. NHS, Child Benefit changes, Age Allowance changes, and this fucking ridiculous Pasty Tax debacle are prime examples.

In other updates, I am now on Facebook, as you can see by the link on the right - please like the page!

Thursday, 22 March 2012

The Facts About #GrannyTax

Following George Osborne's Budget Statement yesterday, the Twittersphere has been alive with the #GrannyTax hashtag - basically alleging that the Government has levied a stealth tax on pensioners.

They haven't, but that won't stop hardline Labour headcases - including the Leader of the Opposition - from demonising the 'SAME OLD TORIES'.

What has happened is as follows.

Currently, those aged over 65 get an enhanced personal allowance for Income Tax of £9,940. Those over 75 get £10,090. This is the amount that you can be paid before you have to pay tax on the excess. The current personal allowance is £7,475. So a 65-74 year-old can expect to get a discount on their tax bill of up to £493 a year. A 75-year-old can expect a discount of up to £523 a year.

It's also important to note that, for pensioners receiving more than £24,000 a year, these additional allowances are withdrawn at a rate of 50% in addition to the Income Tax rate of 20% until they fall back to the standard personal allowance.

It is also worth bearing in mind that pensioners generally do not pay National Insurance, as it is regarded that they paid that to pay for their State Pension and the NHS. Workers do, meaning that their rates of tax are effectively higher. And National Insurance contributions don't even begin to meet the full cost of providing the State Pension and NHS, nor are they exclusively earmarked for such provision any more...

But I digress. The point is, currently pensioners pay far less tax than your average worker.

Osborne has stated the following in the Budget:

  1. The 65-74 and 75+ allowances will increase in line with inflation in April 2012 as planned, to £10,500 and £10,660 respectively;
  2. From April 2013, the age allowances will be frozen and will not benefit from any further increases until they are overtaken by the standard personal allowance. Then they'll be abolished;
  3. Also from April 2013, anyone not already eligible for an age allowance won't get one, just the standard personal allowance, which will be £9,205 by then.
So, in summary:
  1.  No new tax is being introduced - some advantageous age allowances are simply being frozen while the rest of the population catches up;
  2. No one who currently has an age allowance will have one taken off them - it's just that no new ones will be granted as from April 2013;
  3. The new personal allowance is within striking distance of the age allowances, which largely compensates for the changes. The biggest possible difference is £5.60 a week, that some people will have to carry on paying instead of it being knocked off their tax bill;
  4. The Basic State Pension will increase by £5.30 a week, which will more than compensate for the change for most pensioners, reducing the maximum difference to 30p a week that some people have to carry on paying instead of getting it knocked off;
  5. The only effect is caused by fiscal drag, where tax allowances increase at a lower rate than earnings,  and therefore the tax on the value of an income increases. The freezing of the allowances amplifies the effect, but as discussed, it is very slight;
  6. Pensioners will still pay a rate of tax 12% lower than your average worker, as they will continue to be exempt from National Insurance;
  7. Once the personal allowance surpasses the age allowances, the age allowances and their associated tapered withdrawals, which produce marginal tax rates of 70%, will be abolished;
  8. Pensioners in receipt of Pension Credit do not receive enough to pay tax anyway, even on the plain vanilla personal allowance. As such, they will be completely unaffected by the change.
Of course, the policy is not beyond criticism: stopping age allowances for new claimants is a bit close to the knuckle. Freezing the allowances also falls into this category - the Chancellor could simply allow them to continue to increase in line with inflation, and let the personal allowance (which is increasing faster than inflation) overtake them naturally. If he did so, the age allowances would be abolished in 4-6 years instead of 3. But we're talking small differences here.

No pensioner will be worse off on a cash basis. Other policies the Government has announced go a long way to offsetting the effects of fiscal drag. Pensioners will still pay a lower rate of tax than almost everyone else. The poorest pensioners are completely unaffected by the change. And finally, in 3 years, a 70% tax bracket looks set to be abolished.

Granny tax my arse.

Tuesday, 20 March 2012

Quote of the Day

'The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail, its roof may shake; the wind may blow through it; the storm may enter, the rain may enter - but the King of England cannot enter.'
- William Pitt the Elder, hat-tip to Jacob Rees-Mogg MP

Or, to put it more succinctly, an Englishman's home is his castle.

Monday, 19 March 2012

The Futility of the Minimum Wage

The BBC is reporting that the headline rate for the National Minimum Wage will increase by 11p per hour in October. This will take it from a stunning £6.08 per hour to £6.19, an increase of around 1.8%.

So, there's a few points to make of this:

  1. Due to the Bank of England's deliberate policy of operating real negative interest rates and printing money, the Government's preferred measure of inflation, CPI, is currently running at 4.0%. The more realistic RPI measure is running at 5.3%, rendering the paltry rise in the Minimum Wage useless. Wages are falling in real terms;
  2. Remember that the headline rate of the Minimum Wage is gross, i.e. it doesn't have tax taken off. If you're working even 30 hours a week, you're a taxpayer. Which means you'll pay 20% Income Tax on that 1.8% increase, plus 12% National Insurance. Furthermore, you'll be entitled to tax credits, which are withdrawn at the crucifying rate of 41%. This leads to a marginal tax rate of 73%.
So, that 1.8% increase is actually a 0.49% increase in net cash terms, once the State has stripped you of three quarters of your State-mandated pay rise. And then, when you deduct even the State-sanctioned measure of inflation, the poorest working members of society are going to sustain an income drop in real terms of 3.51%.

But we're all in this together, aren't we, Dave?

An alternative:
  1. Don't bother increasing the headline rate of the Minimum Wage - it isn't worth it. There's no point in introducing an additional cost on businesses for 73% of it to be absorbed by the State - 86.8% if you count the additional 13.8% National Insurance the employer has to pay in Payroll Tax;
  2. Increase the annual allowances for Income Tax and National Insurance by £2,000. Decrease the Higher Rate threshold for Income Tax by the same amount. Increase the Upper Earnings Limit for National Insurance by the same amount. Net cost to the Exchequer - nil;
  3. The effect - delivering up to a £640 per year tax cut to all basic rate taxpayers. For someone on Minimum Wage working 40 hours a week, this compensates for the effects of inflation. For someone working 30 hours a week, it actually provides them with a slight rise.
And that's just playing with thresholds, with no cost to the Exchequer, let alone considering how on Earth it can be considered reasonable to tax people and then pay them SOME benefits back in the form of tax credits.

So, Dear Government, if you want the poor to do well, STOP FUCKING TAXING THEM. YOU BASTARDS.

Wednesday, 14 March 2012

My First Conservative Meeting

So, I have thus far kept my word. I have joined the Conservative Party, and last night, attended my first local branch meeting. Much of it was formality, and a bit dry, if I'm completely honest. But there were a few things that got my attention.

Writing to the Press
The bloke from the local Association (next level up) was there, saying that the local Labour branch had been writing into the press recently to raise awareness, and that we (i.e. Tories) should be doing it as well. He went on to say that he can provide advice and guidance over what to write about. He also suggested that, because the press know who some of the more prominent members are, it might be an idea to write under false names.

Lovely. A significant part of political activity seems to be disseminating propaganda under false pretences to the press. What a delightful insight into our modern democracy.

Attitude Towards Money
One of the local councillors was there, and was very pleased to report that the Conservatives (who hold a majority on the Council) have managed to secure a '0% increase in Council Tax this year'.

First off, a 0% increase is what we commonly call a freeze. The phrase '0% increase' implies that there is an increase every year, and it is the exception, rather than the normal, that taxes are frozen. I found that particular nugget rather worrying. Why should any politician automatically assume that taxes should rise every year?

What also bothered me was the fact that he was happy that Council Tax was merely being frozen. I would be happy if it were cut. I would be delighted if it were abolished. The fact that it has been frozen is merely acceptable.

Another issue was on the subject of bus shelters - riveting stuff, I am sure. Some people raised concerns that some of the bus shelters were in a poor state due to vandalism, etc. One of the members piped up that the council has received a sizeable sum of money from Whitehall for 'local transport infrastructure', and it would be a good idea to spend it on the bus shelters!

Again, what bothered me was the willingness to act fast and loose with money which isn't theirs. I then asked what I considered to be a rather obvious question. Given that the bus companies manage to make a healthy profit from providing their services to the public, why does the taxpayer need to provide a labour and material subsidy to those companies in the form of constructing and maintaining bus stops? We wouldn't buy and maintain buses for them, so why do it for bus stops?

The answer was that it was a bit like asking train companies to maintain train stations.

Precisely. Like they used to, before the nationalisation in the 1940s.

Not yours. Leave it.

The matter was glossed over.

There's a lot of work to be done.

Thursday, 8 March 2012

First Contact

So, I did it. I have paid my £25 membership fee, and am now a fully-fledged member of the Conservative Party. Membership card in the post.

I've already received a few e-mails from the local association, inviting me to their next meeting. I will be attending. We'll see how it goes.

In other news, I have recently figured out what CSS does, and thus have been playing with the blog a bit. A few changes to the layout have been made, but nothing major.

Blogging has been a bit quiet recently - life is currently getting in the way!