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[Pathos]

Source

Spoiler (click to show/hide)

VAT is to rise from 17.5% to 20% in January after George Osborne unveiled the biggest package of tax increases and spending cuts in a generation.

He said his "tough but fair" Budget was "unavoidable" although he told MPs in the Commons there would be no extra tax on alcohol, tobacco and fuel.

Child benefit will be frozen for three years, public sector pay frozen and 25% cut from government department budgets.

Labour said the Budget was "reckless" and would "throw people out of work".

Acting Labour leader Harriet Harman said it would stifle growth and hit hardest "those who can least afford it".

But Mr Osborne laid the blame for the state of the nation's finances squarely at the door of the previous Labour government, saying: "The years of debt and spending make this unavoidable."
'Progressive budget'

He promised to balance Britain's books within five years - faster than Labour was planning, with the bulk of the savings to come from cuts to benefits and public services rather than tax increases.

He said action was needed to prevent a "catastrophic collapse" in economic confidence but stressed it would be done in a "fair" way with the better-off shouldering most of the burden.

"Everyone will pay something but the people at the bottom of the income scale will pay proportionately less than those at the top. This is a progressive Budget," he said to jeers from Labour MPs.

Tax credits will be cut for families earning more than £40,000 a year - and there will be a two year pay freeze for public servants paid more than £21,000, with those earning less all getting a £250 rise.

Mr Osborne also heralded swingeing cuts in public services by announcing departmental budgets - except health and foreign aid which are ringenced - which will see real terms reductions in their budgets of 25% over four years.

The full detail will not be revealed until Wednesday 20 October, when Mr Osborne publishes his spending review.

In addition to the VAT increase, which Mr Osborne said would raise £13bn a year, capital gains tax will be increased to 28% for top rate taxpayers - less than the 50% some Conservative backbenchers had feared.

And he ended his speech with a pledge to link pensions to earnings - or prices or 2.5% if they are higher.

In other moves, housing benefit will be reformed with a maximum limit of £400 a week, in a package saving £1.8bn a year by the end of the Parliament.

Other benefits to be cut include the health in pregnancy grant while the Sure Start maternity grant will be restricted to the first child only and lone parents will be expected to look for work when their youngest child goes to school.
Bank levy

But there will be an extra £150 a year for the poorest families, through changes to family tax credits to ensure, Mr Osborne said, child poverty reduction targets would be met.

The government is also to introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.

Mr Osborne also announced plans to help the low paid by raising personal tax allowances, taking an estimated 880,000 people out of the tax system and give millions of basic rate taxpayers a tax cut of £200 per year.

From January 2011, the Government will introduce a bank levy, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks. Mr Osborne said the move would raise £2bn a year once it was fully in place.

Mr Osborne said public sector workers paid more than £21,000 a year would have a two year pay freeze with those paid less getting a flat pay increase of £250 for the next two years.

The plan is the first step towards a key Liberal Democrat coalition demand of taking all those earning less than £10,000 out of tax.

'Enterprise-led recovery'

The chancellor must find £3.5bn to pay for the giveaway - which will be clawed back from top rate taxpayers - and Labour are likely to argue it is irresponsible in the current climate.

Mr Osborne also froze the Civil List payments to the Royal Family at £7.9m a year and said in future years they would be subject to scrutiny by the National Audit Office.

It is rare for a Budget to contain both an overhaul of the taxation system and a significant shift in the boundary between public sector and private sector

Robert Peston BBC Business Editor Robert Peston's blog Nick Robinson's blog Stephanie Flanders's blog Analysis from around the web

He stressed that the pain of his austerity measures would be shared by "everyone" - but said all would share in the proceeds of the "enterprise-led recovery" that he promised would follow.

"Yes it is tough, but it also fair," said Mr Osborne of his first budget, adding: "Everyone will share in the rewards when we succeed. When we say that we are all in this together, we mean it."

He said that the Office for Budget Responsibility (OBR) now estimated growth this year of 1.2% and 2.3% next year - compared to its previous forecasts of 1.3% of 2.6%.

Giving her response to Mr Osborne's statement, acting Labour leader Harriet Harman poured scorn on the Liberal Democrats for providing a "fig leaf" for their Conservative coaltion partners, arguing "this reckless Tory budget would not be possible without the Lib Dems".

"How could they let the Tories so exploit them?," she said, adding: "The Lib Dems leaders have sacrificed everything they ever stood for to ride in ministerial cars and to ride on the coat tails of the Tory government."

In a message last night to Liberal Democrat supporters, Deputy Prime Minister Nick Clegg made clear that his party was fully signed up to the coalition's economic strategy.

He rejected accusations that he had "sold out" to the Conservatives, insisting that the Budget would bear "the stamp of our Liberal Democrat values".

Spoiler: In Short (click to show/hide)

BUDGET MEASURES
    * VAT increase
    * Public sector pay freeze
    * Child benefit frozen
    * Housing benefit cuts
    * Disability Living Allowance cuts
    * Tax cut for lowest paid
    * Two year council tax freeze
    * Capital Gains Tax increased
    * Bank levy
    * NI tax holiday for job creation outside South-East of England

Key points: At-a-glance Harman attacks 'reckless' Budget How the VAT rise will work UK to 'balance books' by 2016

Well, for everyone who isn't ridiculously rich, we're fucked. Lib Dems have sold out to get their proportional representation (LOL YEAH RIGHT AS IF THAT'S GONNA HAPPEN), and this has just hamstringed all benefits. Nevermind the massive unemployment from public sector cuts, lack of proportional taxation (this is taxation across the board? Good fucking job) etc etc.

Fucking ridiculous.

To everyone who voted Tory: You're an idiot.

[Huesoo]

Why dont they just stop paying people for living in caravans and being a lesbian?

[Aqizzar]

My reactions so far -

*Sees thread* UK Budget problems eh?  Maybe I'll get around to reading this later...

Why dont they just stop paying people for living in caravans and being a lesbian?

Okay, now I'm interested.

[Huesoo]

My reactions so far -

*Sees thread* UK Budget problems eh?  Maybe I'll get around to reading this later...

Why dont they just stop paying people for living in caravans and being a lesbian?

Okay, now I'm interested.

Note: My only knowledge on this matter is that my friends mom said if she ever lost her job (as a joke) she would cut off her leg, have another child, move in with the pikeys, become a butch lesbian and turn into a paki. (Not I am quoting her, I am sorry if her language offended anyone) So she could just reap the benefits, could someone who hasnt lived in England for more than half a year please explain it more?

[Leafsnail]

I can tell you without the slightest shadow of a doubt that she is, y'know, joking.

[Pathos]

I can tell you without the slightest shadow of a doubt that she is, y'know, joking.

I don't know. Minorities DO have a higher chance of getting a job, if they're qualified, simply due to the lack of them and the possibility that the company could get sued if it seems they don't hire them.

[Leafsnail]

Sued by who?

[Pathos]

Sued by who?

By the people who get rejected for jobs and can claim it's due to racial prejudice.

[palsch]

It is a horribly regressive set of moves being called progressive by, frankly, liars.

There are two progressive elements;

- Capital gains tax increase for those in the highest tax band.
- Income tax personal allowance increase by £1000, worth £170 per year in taxes saved.

The first is actually a sensible revenue stream. Thing is, the Lib Dems had pushed for a higher rate than this. Compare the new 28% to the top band income tax of 50% on earnings over $150,000. [EDIT: The increase will apply to those on the higher rate of 40%, incomes over £37,401. I don't disagree with this part, but it's that the increased capital gains are still only taxed at <2/3 of income that doesn't make sense.] Add in the £10,100 exemption before the capital gains kick in and the tax here is pretty soft for individuals who see most of their income through capital gains. So while this is largely progressive, it's still fairly minimal and I don't see it offsetting the other changes.

The personal income tax allowance is also nice, and if their 880,000 figure is true (the number of people who will stop having to pay tax) then a solid progressive step. However, it leaves a few holes.

1) This is a personal allowance. Single income households will be hurt in comparison with those on two incomes.
2) Income tax already only covers 62% of the population. The rest won't benefit at all from this, being on the lowest incomes and being hit hardest by the decreased benefits and increased VAT.

That VAT increase really hurts when combined with that above fact. VAT is hugely regressive. The takeaway numbers for VAT;

The richest 10% pay one in every 25 pounds of their income in VAT; the poorest 10% pay one in every seven pounds as VAT

And that is before the increase, which will only push the numbers up. Those who are hurt most are those who gain least (if anything) from the income tax allowance.

And again, the income tax allowance is a watered down version of a Lib Dem goal to push the allowance to £10,000.

The benefits cuts are even worse than they look at first glance, and there are only a couple of other silver linings out there, which aren't exactly applicable across the board. Going to have to try to dig out some more analysis.

[alway]

There's also this: http://www.rockpapershotgun.com/2010/06/22/uk-tax-relief-for-game-developers-scrapped/

[Leafsnail]

By the people who get rejected for jobs and can claim it's due to racial prejudice.

Mind quoting a source of someone suing a company simply for being rejected, without evidence of actual racism being demonstrated?

The main thing about the budget seems to be that it's comically short sighted.  Its only aim is to reduce expenditure this year... and nothing else, apparently.

[palsch]

There's also this: http://www.rockpapershotgun.com/2010/06/22/uk-tax-relief-for-game-developers-scrapped/

Hardly a surprise. It's a Tory government and last time I looked a lot of game companies had moved to Scotland. Since when have the Tories cared about them?

[/halfjoking]

[Pathos]

Mind quoting a source of someone suing a company simply for being rejected, without evidence of actual racism being demonstrated?

I'm not against it, trust me, but it doesn't stop it being there. It annoys me that it's still there, but saddens me that without it we'd probably have a lot of racial minorities being unemployed.

I can't find any sources, but I remember a semi-famous one of a trucking company rejecting one of their loaders for the job of truck driver. He accused them of racial prejudice, the government checked what ethnicity the truckers were and it turned out they were around 95% white. Naturally, he won the case and about £40,000.

The main thing about the budget seems to be that it's comically short sighted.  Its only aim is to reduce expenditure this year... and nothing else, apparently.

Pretty much. Tories are just sloppy sloppy choppy choppy.

[Maggarg - Eater of chicke]

THERE WILL BE VAT ON BOOKS.
I MUST HAVE HIS BLOOOOOOOOOD.

[palsch]

THERE WILL BE VAT ON BOOKS.
I MUST HAVE HIS BLOOOOOOOOOD.

Nope.