The Budget will be read on 22 April 2009, 16 days after the start of the tax year. How awkward, how inconvenient.
But why so late? The cynical amongst us might wonder at its being scheduled two days after Barack Obama's expected visit to Britain. Surely Labour is not hoping for some Obama-shine to rub off on them, and distract us all from the contents of the Budget two days later? Surely not.
The Finance Act 2008 received Royal Assent on 21 July 2008.
As far as complicated legislation goes, this Act takes some beating. Over 400 pages, packed with amendments, repeals, etc. Normally, such an Act would have a Schedule at the end, setting out all the legislation repealed by that Act. This time, the draftsmen did not even bother. So, for the first time that I can recall, the Finance Act does not include a Repeals Schedule. It is therefore impossible to tell, at a glance, what legislation has been repealed by the Act. Frankly astonishing. Even in view of its well-deserved reputation for sloppy and incompetent drafting, this Government has somehow managed to surpass itself.
Reports have it that the taxman is planning another "amnesty" for taxpayers with offshore income.
After the "spectacular success" of the first one, right?
One wonders why the taxman is being so generous. I would have thought that, having obtained so much information about tax-dodgers and their affairs (by means of the EU Savings Directive, court orders, whistleblowers, etc), the taxman would by now have pounced on the fiddling miscreants. But no, instead he seems to want to "help" them get their affairs in order.
Could it just be that, far from being kind, the taxman simply lacks the resources (or perhaps more accurately, the competence), to trace these people and take them to task? Instead of getting his hands dirty doing some proper investigation work, the taxman prefers to sit back and offer an "amnesty", in the hope that those affected would turn up willingly and confess. Surely, by now, a few such taxpayers might be tempted to call the taxman's bluff by sitting tight and saying nothing. A risky move, but looking at the taxman's record of blunders over the past few years, I can see why a taxpayer might well take that gamble.
The Telegraph is reporting that families are facing their highest tax burden since 1991.
Not at all surprising, I must say.
Much of the increase comes from stealth taxes. The basic rate of income tax has not moved much in the past 17 years: recently, we've had 23%, then 22%, and now 20%. However, council tax has shot through the roof, as have indirect taxes such as the excise duties on fuel. Oh, and let's not forget fiscal drag - that convenient ruse by which Chancellors rake in more tax by increasing the tax-free allowance by the rate of inflation, well knowing that salary rises oftentimes exceed that rate. Result? More people fall to be taxed as higher earners than would otherwise be the case.
So yes, none of this is surprising. The only surprising thing is that the Telegraph article does not contain any remarks from a Government minister. In time past, someone would have turned up to dispute the data, claiming that things have never been rosier for the British people. So did the Telegraph not bother to ask a minister to comment? Or could it be that no Government minister came forward to argue the case? Perhaps they all now realise the desperate hollowness of their empty words, not just to the electorate, but more significantly, to themselves?
Most likely. The Telegraph is reporting that Alistair Darling is thinking twice about the retrospective "green" taxes introduced in the last Budget. Good to know that someone in this Government is waking up to the lunacy of the whole idea. They claim that the punitive rates of tax on environmentally unfriendly cars is necessary to "change behaviour". But if so, why apply that tax to cars that have been on the road since 2001? In such cases, the so-called offending behaviour has already taken place, and more importantly, was not "punished" at the time. Why punish a man for buying a car 7 years ago, long before the green tax greed infected tax policy?
Who will rid us of this clueless bunch of incompetents? It would all be so hilarious were it not for the fact that they are causing proper damage to everything they touch.
Still, the u-turn is welcome news, if true.
Faint warnings (for now at least) of the possibility of a "broadband tax" to pay for the public service programmes put together by commercial TV stations.
The proposals are being put forward by the Office of Communications (Ofcom), the regulator for telecoms. It is included in their latest public broadcasting review. Click here to read the pdf, if you must.
So Ofcom thinks it's a good idea to introduce a tax to pay for such programmes. In their words,
It might be possible to introduce levies on providers not currently part of the formal public service broadcasting model, such as broadcasters, equipment sales, internet service subscriptions or UK online content providers.
Interesting how they use the less aggressive word, "levy", to describe what is in essence, a tax.
Needless to say, this "levy" will not be borne ultimately by the internet service provider. Rather, it will be passed down to the poor consumer, who will have to pick up the tab for whatever passes for "public service" programmes in dumbed-down Britain today.
What rot. Now I have nothing against public service programming - some of the programmes are quite good - but I fail to see why the average broadband user should be made to pay for programmes for which he does not care. If these public service programmes provide value, surely it shouldn't be too hard for them to find some commercial sponsors, and leave the poor taxpayer alone. If, on the other hand, they can find no advertisers or sponsors for their wonderful programmes, then perhaps we are all philistines who do not know what is good for us. Forcing us then to pay for such programmes would not be right, as we obviously do not value them enough to watch them. But perhaps Ofcom does not care whether or not we watch; they are simply satisfied if they can part us from our money.
Protests are mounting over the abolition of the 10% rate. Even Government ministers and high-ranking Labour Party members are joining in the criticism of the Government.
Gordon Brown will probably calculate that it would be too embarrassing to do a U-turn and keep the 10% rate after all. Even so, he will probably feel he has to do something to give the impression that he cares about the lowest earners and pensioners who will be most affected by this measure. This is my prediction: the announcement of a benefits package "providing targeted help to the most vulnerable in society". Therefore, more tax credits. In other words, more form-filling, more bureaucracy, more complexity, more waste.
It would be easier simply to raise the tax-free allowance to, say, £10,000, thereby ensuring that the lowest earners get to keep most of their income. However, don't hold your breath.
The 2008-09 tax year begins today, with loud cries of protest over the abolition of the 10% tax rate ringing in the Government's ears. Technically speaking, the 10 tax rate still exists, but only for "savings income", i.e. interest and similar income. Employment and pension income will be taxed, initially at 20%, and then at 40%.
The basic rate is reduced from 22% to 20%, however, this is small comfort to the lower earners who will be hit hard by the loss of the 10% rate.
Will the Government change its mind, and keep the 10% rate after all? Not such a far-fetched idea; this is, after all, a Government whose tax policy consists of blunders and U-turns. The Finance Bill is currently going through Parliament, so until it receives Royal Assent in mid-July, anything is possible.
The Finance Bill was published last Thursday - all 443 pages of it. I had a brief, crazy idea to print out the Explanatory Notes, but quickly gave up the idea on seeing that they ran to 1148 pages!
So much for simplification.
The Bill and Explanatory Notes can be downloaded here. (Very large pdfs - you have been warned)
The Chairman of Her Majesty's Revenue and Customs has resigned. Rumour has it that this relates to a breach of data security, involving the records of 7.5 million child benefits claimants. The Chancellor will be giving a statement to the House of Commons later today.
Hmm. And this is the Government that keeps trying all means to get its hands on our data? How secure is any data that we give to this Government?
I have queried in the past the wisdom of requiring a tax collection authority to pay out benefits. The taxman knows more about collecting money than about paying it out, so getting him to administer child benefits was always going to be tricky. That aside, a security breach is a security breach. It could still have happened even if the taxman wasn't administering benefits (ie it could still have happened in the course of the taxman's handling of taxpayers' records), but the extra role as benefits administrator only made it even more likely.
As a side point, it's a bit strange these days to see a honourable resignation.
Will write more after hearing what the Chancellor has to say.
