Budget verdict

lostinrates

dervish wrote: »

A low-tax economy is a good economy.,

In general I would prefer a low tax economy too. However, we found our selves where we are, huge national debts and liabilties and a very different economic forecast than we could have hoped for. So, now, unfortunately, we all have to sort it out, that means paying viw tax. I don't really see anyway round increased taxation now. I have fearsof soe of the ramifications of this, but they may never come to pass.

ad9898_3

Dithering_Dad wrote: »

I doubt that you'll be safe in Oz, Gen. They have a 21M population, with obviously a much smaller number of actual tax payers. So fewer people supporting a modern western infrastructure including free health care, state pensions, police, fire, ambulance & lifeguard services, rail & road infrastructure. This is all before you factor in their own economic stimulus package. Quite a burden on so small a number of tax payers.

They are only just going into recession IIRC, and it's unlikely to be anywhere near as bad as it is here, their economy was pretty balanced before the !!!!!! hit the fan, we on the other hand were buried in the red, or in Gordon speak 'borrowing to invest':rolleyes:.

By the way. I'm supposed to be £88 better off, doesn't feel it.

Sir_Humphrey

As the initiator of the poll, I do not want to get stuck in too much on the discussion as I am trying to keep it at least 5% scientific.

One hope of mine is that this budget will finally end the fiction that you can have a low tax economy and good public services. A return from such a la-la land would be welcome. There is a choice, just as there should be in a democracy.

The elephant in the room is future income tax. That there will be public spending cuts in future is inevitable, but the extent of the cuts projected are almost certainly politically impossible - so will not happen. (There is no net benefit to the population if an income tax cut comes at the expense of NHS charging for heart surgery for instance). I expect the basic rate of income tax to be somewhat higher than today in ten years time.

Generali

Sir_Humphrey wrote: »

As the initiator of the poll, I do not want to get stuck in too much on the discussion as I am trying to keep it at least 5% scientific.

One hope of mine is that this budget will finally end the fiction that you can have a low tax economy and good public services. A return from such a la-la land would be welcome. There is a choice, just as there should be in a democracy.

The elephant in the room is future income tax. That there will be public spending cuts in future is inevitable, but the extent of the cuts projected are almost certainly politically impossible - so will not happen. (There is no net benefit to the population if an income tax cut comes at the expense of NHS charging for heart surgery for instance). I expect the basic rate of income tax to be somewhat higher than today in ten years time.

I agree absolutely - you can't have a system where the Government produces a large proportion of services in an economy but doesn't take the money from the people to pay for it.

The obvious areas for cutting expenditure are health and welfare as these two are the biggest spending areas.

The most obvious thing to raise additional taxation from is pension schemes - Brown has already shown he is happy to take large amounts of money from future pensioners. One way would be to force pension schemes to invest more money in Gilts which would reduce Gilt yields and be an effective tax on the pension schemes (by reducing the income they received from investments to the advantage of the Government).

It's hard to see what sector of the economy can be taxed more - consumers and businesses are hurting, soaking the rich is a pretty inefficient way of raising money (if politically attractive right now).

matthewcb

Sir_Humphrey wrote: »

One hope of mine is that this budget will finally end the fiction that you can have a low tax economy and good public services. A return from such a la-la land would be welcome. There is a choice, just as there should be in a democracy.

I mostly agree.

However, I think the problem with public services is that there is such institutionalised inefficiency in the culture, that regardless of how much money you throw at it, there will a diminishing, disproportionate return.

Conversely, making cuts (or, in New Labour speak, 'efficiency savings' ) will probably not be as noticeable as they would be in the private sector industries.

Generali

Dithering_Dad wrote: »

I doubt that you'll be safe in Oz, Gen. They have a 21M population, with obviously a much smaller number of actual tax payers. So fewer people supporting a modern western infrastructure including free health care, state pensions, police, fire, ambulance & lifeguard services, rail & road infrastructure. This is all before you factor in their own economic stimulus package. Quite a burden on so small a number of tax payers.

FWIW, I think the stumulus package is a mistake. Having said that, Rudd has done little more than spend the accumulated surplus so far so hasn't really done so much damage to Government finances.

Maintaining infrastructure in such a massive, sparsely populated place is hard and unfortunately, country areas are likely to bear a lot of the brunt of cuts in Federal spending as they have fewer voters.

You only have half the picture with health care - a basic system is free but you have to pay for a lot yourself (physiotherapy for example as I am finding out to my personal cost).

Fire is an interesting one. Most of the firefighters in rural areas are volunteers I think.

Ambulance and police are state funded. Most infrastructure is too. My guess is that the pot holes will get a bit bigger for a while - Aussie cars are generally built a bit tougher than European ones so it's not such a problem.

Aussies have quite a make do and mend attitude to life still - they pride themselves on it in many cases.

She'll be 'right.

Conrad

ad9898 wrote: »

They are only just going into recession IIRC, and it's unlikely to be anywhere near as bad as it is here, their economy was pretty balanced before the !!!!!! hit the fan, .

A builder client recently repatriated himself to blighty. He told me it was too difficult in Aus

Sir_Humphrey

matthewcb wrote: »

I mostly agree.

However, I think the problem with public services is that there is such institutionalised inefficiency in the culture, that regardless of how much money you throw at it, there will a diminishing, disproportionate return.

Conversely, making cuts (or, in New Labour speak, 'efficiency savings' ) will probably not be as noticeable as they would be in the private sector industries.

A lot of the measures mentioned such as hot desking, cutting backroom staff have already been tried.

Hot desking just doesn't work - it would take a long time to get out and pack away all my papers every day, and people have to work together in teams.

Cutting backroom staff means replacing them with IT systems. 'Nuff said.

There are obvious targets for programme cutbacks, such as ID cards/DNA databases, the more extravagent IT systems, Trident (more controversial).

I will give an example of where savings are unpopular. The current govt policy is to reduce subsidy to the rail network. To close routes would be nuts and political suicide. So fares are forced up. Now, the private rail system is very inefficient, but even if it were replaced with a more sane system subsidy would have be maintained to keep fares even half reasonable.

A lot of government savings would mean passing on costs to voters. The money has to come from somewhere.

Generali

Sir_Humphrey wrote: »

A lot of government savings would mean passing on costs to voters. The money has to come from somewhere.

You are right. Let's take the cost of running the railway. It's partly subsidised by the taxpayer and partly paid for by users.

If costs are passed on to voters (taxpayers) then they can choose whether or not to pay. That's a good thing IMO.

I once decided that I didn't want to commute any more so moved to central London. I was still forced to spend money on trains despite never using them.

Sir_Humphrey

Generali wrote: »

You are right. Let's take the cost of running the railway. It's partly subsidised by the taxpayer and partly paid for by users.

If costs are passed on to voters (taxpayers) then they can choose whether or not to pay. That's a good thing IMO.

I once decided that I didn't want to commute any more so moved to central London. I was still forced to spend money on trains despite never using them.

You do not pay for specific services with taxation. It all goes into one pot. There probabilty is that I will never get cancer, but I would want those services to be available.

A lot of railway services are a) essential b) inherently unprofitable (suburban trains have never been very profitable owing to peaked demand) and c) natural monopolies so it cannot be left to the market.

There are other hidden subsidies. For example, almost all the damage done to roads is done by HGVs, (as the damage done to roads is on a logarythmic scale to the weight of a vehicle). IIRC, if HGV road tax reflected the damage done to the road, and car road tax kept the same, every HGV would need to pay around £2 million in road tax per year.