Non-partisan mini-budget predictions thread

MK62

My predictions are....public sector pay rises well below inflation.......and more strikes.
Triple lock....I suspect not.....

Benefits.....same treatment as triple lock.....

......and then some tinkering around the edges.....a bit of CGT here, a bit of dividend tax there....maybe a sprinkling of windfall tax on energy companies.......and then some "eye wateringly difficult" cuts in public spending.......

MattMattMattUK

DannyCarey said:

My guess is the Tories will make sure they cover themselves first then they will screw everyone as much as they can get away with.

Both the Conservatives and Labour have always proposed and/or implemented putative tax measures on the voters for the other party and rewarding benefits to their own side. The problem is that neither side is willing to take a grown up approach that means that everyone pays more tax, so the destructive dueling continues.

Albermarle

Millyonare said:

dunstonh said:

talexuser said:

I find it hard to understand how we have gone from a position of Osbourne austerity went too far and was self defeating which was widely said until recently, to now we need the same again. But then I don't understand Kwarteng saying his budget was not responsible for the present situation.

That period wasnt real austerity.  It was austerity in name only.   They announced things then backtracked or delayed.  There were cuts but they were not at a level to genuinely be classed as austerity.    

Yup, "austerity" and "cuts" were (very) clever catchphrases, hammed up by the far-Left to antagonise the ruling Tory party. The catchy phrases were staggeringly effective at manipulating and propagandizing public perception. Total UK debt actually doubled in the 2010s (no austerity).

And the catchphrases keep on coming. Now, in the 2020s, we always have a "crisis" or "emergency", even if the economy is the fastest-growing in the G7, national debt payment near historical lows, and effectively full employment (no crisis).

We live in an era of almost unprecedented (and highly effective) socio-economic propaganda!

From the DT today

Britain is leading the rich world’s plunge into recession. The economy shrank in the three months to September, even as every other nation in the G7 managed to eke out growth.

Data from Reuters shows that UK GDP is still 0.2% below what it was at the end of Q4 2019
US is 3.5% up; DE is flat; Italy and France up around 1%

mebu60

MattMattMattUK said:

I think they will hit investors, business owners and pension savers most, with rises to CGT, Dividend Tax and cuts to pension contribution tax breaks. There will be a windfall tax on energy producers, but it will probably be for theatre rather than revenue and will largely be avoidable using buybacks and future investment. 

What I think should happen is cutting of the personal allowance (cutting to £2,500 pa would raise around £45 billion).
Abolishing the dividend allowance but no increase in rates. 
Non-domiciled tax status abolished (would raise £10-35 billion depending on behavioural changes).
Dividend tax charged on all dividend paid to non-UK taxpayers (many other countries already do this and nearly all offer credits to their own taxpayers on foreign paid dividend so it should not cause any dip in inward investment, would likely raise around £30 billion).
Combining Income Tax and NI into one overall combined Income Tax rate.
Allowing Council Tax to be raised by up to 10% for the next three years. 
Increase in Alcohol tax, but with the original plan to align taxes by alcohol percentage brackets. 
Increase tobacco tax significantly.
Increase fuel duty.
National equalisation of housing benefit, with the aim for a national fixed rated by 2030 (encourages people to move to where they can afford to live, just as those who pay for our own homes already have to do).
Raise benefits and pensions in line with inflation and commit to do so for the remainder of the parliament, but abolish the triple lock.
Probably a load more as well, but those are the obvious ones.

Not convinced about combining income tax and NI. The former is on all income the latter on earned income only. There's a large and not necessarily wealthy demographic that does not pay NI. I also think it's such a big change it would be 'leaked' for quite some time beforehand to manage expectations / gauge reaction. Plus standalone NI is more tweakable for political purposes than changing headline rate of income tax. 

MK62

Millyonare said:

dunstonh said:

talexuser said:

I find it hard to understand how we have gone from a position of Osbourne austerity went too far and was self defeating which was widely said until recently, to now we need the same again. But then I don't understand Kwarteng saying his budget was not responsible for the present situation.

That period wasnt real austerity.  It was austerity in name only.   They announced things then backtracked or delayed.  There were cuts but they were not at a level to genuinely be classed as austerity.    

Yup, "austerity" and "cuts" were (very) clever catchphrases, hammed up by the far-Left to antagonise the ruling Tory party. The catchy phrases were staggeringly effective at manipulating and propagandizing public perception. Total UK debt actually doubled in the 2010s (no austerity).

And the catchphrases keep on coming. Now, in the 2020s, we always have a "crisis" or "emergency", even if the economy is the fastest-growing in the G7, national debt payment near historical lows, and effectively full employment (no crisis).

We live in an era of almost unprecedented (and highly effective) socio-economic propaganda!

Back in the real world......
https://ifs.org.uk/recent-cuts-public-spending

Austerity relates to public spending....in real terms (ie adjusted for inflation)......the headline national debt grew due to QE (but you also have to account for the fact that as a result of that QE, a large chunk of the total is now owned by the BoE)

PS......the rather selective statistic that the UK economy is the fastest growing in the G7, hides the fact that the year before it was also the fastest shrinking......and even now is the only G7 country yet to recover to it's pre-pandemic GDP level...
https://www.bloomberg.com/news/articles/2022-09-30/uk-economy-averts-immediate-recession-with-0-2-expansion

sevenhills

talexuser said:

But then I don't understand Kwarteng saying his budget was not responsible for the present situation.

You would think that economics would be quite straightforward, but even economists disagree.
The rich that are experts in economics tend to favour the rich. Most people have a bias.
The Cameron government was good, but rediculed the poor.

MDMD

According to the Telegraph today they are planning on lowering the 45% rate to £125,000, which I think means there will be a very small slice of income that has an effective 67% rate as it will cross into the band where the personal allowance tapers away….

https://www.telegraph.co.uk/politics/2022/11/12/sunak-hunt-mull-income-tax-grab-thousands-britons/ (Paywall)

kinger101

MDMD said:

According to the Telegraph today they are planning on lowering the 45% rate to £125,000, which I think means there will be a very small slice of income that has an effective 67% rate as it will cross into the band where the personal allowance tapers away….

https://www.telegraph.co.uk/politics/2022/11/12/sunak-hunt-mull-income-tax-grab-thousands-britons/ (Paywall)

Ouch.  The 60% is already bad enough (and made much worse if you have kids at nursery).  

Personally, I think it would be better to lower the 45% rate threshold to £100K plus then remove the taper and loss of nursery hours/childcare.  But I think that would probably cost them more than they recover.

The whole income tax system needs a radical overhaul IMO, which also targets mid-earners (£35K+).  Focusing on £100K+ earners brings in very little.  

MK62

In the end, no matter what they do, some are going to be saying "ouch".......but  the government need to remember that there is a cost-of-living issue at the moment, coupled with an impending recession and many are already feeling the squeeze - the chancellor has little room for any more tax rises on the majority at this time.......which is why he might go more for spending cuts and other money saving measures, such as reliefs and allowances, which won't hit the majority directly in the pocket now.

hallmark

Another aspect that should be considered:

https://www.telegraph.co.uk/business/2022/11/12/tax-rises-loom-obr-forecasts-have-wrong-years/

Whatever you think about the Telegraph, most of the facts are unarguable.  For example that the OBR are terrible at forecasting and have a pretty much 100% record of getting it wrong, whether it's on Borrowing, Inflation or GDP.