Friday, March 23, 2012

The 'Granny' Tax

Because the last Government left us with no money, and we are weighed down by massive deficits and debts, the Chancellor had no scope to reduce taxation on Wed., and no option but to deliver a fiscally 'neutral' budget. This blog outlines what I saw as the significant taxation announcements within this 'neutral' budget - of which there are three biggies. I do not include the reduction in the top rate of tax from 50% to 45% (from 2013), because it has almost no impact on taxation receipts. The 50% tax rate makes no economic sense at all. Gordon Brown set it as a political 'trap' for the incoming Government when he realised he was going to lose in 2010. So its no surprise that Labour are seeking to make a big deal of it. Personally, I do not think this will concern most people - because they are not daft. There are several more important changes.

The three 'biggies' are personal taxation allowances, corporation tax, and the freeze on age-related allowances (so-called Granny Tax). My aim is to be factual rather than partisan in my commentary because I've been surprised by the lack of knowledge that I've encountered. I'll be willing to be more opinionated in any comments.

The decision which dominated the Budget was the raising of the personal tax allowance from £8105 to £9,205. This took another 840,000 people out of the tax system altogether (42,000 in Wales). The allowance was £6475 when the Coalition Gov't came to power. Since then 2 million people have been lifted out of the tax system. This is a dramatic change in how Gov't raises taxes.

The second big change is the reduction of Corporation Tax by an extra 1p. This tax is being reduced from 26% t0 24% this year, adding to previous reductions and with further reductions to come. The aim is to encourage business to locate in the UK, and the decision by GlaxoSmithKline to confirm its £500 million, 1000 job investment on the back of the budget was great news. This change is the Chancellor's main weapon to create jobs

The third big decision is more controversial, and has been much criticised. I've had several protesting emails over the decision to freeze age-related tax allowances. At present the age-related tax-free allowance is £10,200, (while the general personal allowance is being increased to £9205. There is no 'cash' reduction to the tax free threshold - but of course its 'value' will be lessened by inflation. Also, the impact of the decision is ameliorated by an increase of 5% in the state pension. It will remain at £10,200 until the personal allowance catches up. The intention is that personal income tax allowances of everyone should be the same, irrespective of age.

Because this third change is so controversial, I've had to think about it a lot. I don't pretend its easy, or that I like it, or that its popular, or that its not negative for the pensioners it effects. But my experience of talking to constituents is that the people under greatest financial pressure are young people with children. We have to ask ourselves whether we can justify a system of tax allowances which discriminates against them. The underlying issue facing the Chancellor is that he has to produce a 'coalition' budget - and there is simply no money to introduce the required changes in priority. The overall taxation product cannot be reduced. Tough decisions. Certainly not a budget for votes, but a budget that supports our poorest citizens and is right for the nation. Now I am being political, I suppose.

Monday, March 19, 2012

Facts about Equal Civil Marriage

Just thought I'd share parts of the letter I received from the Home Secretary informing me of the consultation on 'equal civil marriage'. This issue is dominating my discussions with party members. I've not read the document yet, and will wait to see how the debate develops before taking a final view on it. But I can say that there are a lot of other issues I'd rather be talking to constituents about. Anyway, I thought it would be useful to make some of the Home Secretary's 'facts' public.

"The consultation looks at removing the bar on same sex couples having a civil a register office or approved premises e.g. a hotel"

"We are making no changes to how religious organisations define and solemnize religious marriage. .......I am very clear that a marriage through a religious ceremony and on religious premises will continue to be only legally possible between a man and a woman."

"We are proposing that civil partnerships are maintained for same-sex couples.... enables us to to maintain the current provision of civil partnerships on religious premises, on exactly the same basis as currently.... the bar remains on any religious elements forming part of the civil partnership registration"

"the consultation will allow, for the first time, individuals to change their legal gender without having to end their existing marriage or civil partnership".

There's quite a lot more, but I think I've covered the gist of it.

Sunday, March 18, 2012

Team of the Six Nations (and four nations)

So little time to post at present. My wife's chosen epitaph for me. "He just didn't have time". But now that the Six Nations is over I thought I'd choose my teams of the Tournament, and tomorrow's Lions team. I wasn't going to bother until I caught up with Paul Ackford's assessment in today's Telegraph. Just screwed the paper up and threw it in the fire. He's either blind or biased. Time for the management to give him something else to write about. How on earth can he leave the 'Player of the Tournament', Dan Lydiate out of either team. Its this sort of reporting that threatens the Union. Definitely makes me feel more Welsh - which may influence my selections.

Full Back; Kearney's good, but Halfpenny's better. (Wales).
Wings; Cuthbert comes close, but for me its Bowe and North. (Ireland and Wales)
Centres; Several contenders, including Barritt, Jamie Roberts. I go with Jonathon Davies and Fofana, replaced by Tuilagi for the Lions. (Wales, France).
Stand off; Sexton just edges out Farrell and Priestland. (Ireland)
Scrum Half; Mike Phillips (Wales)
Props; English props are both good, but its got to be Jenkins and Adam Jones (Wales and Wales)
Hooker; Mathew Rees is good but I'll go for Dylan Hartley (England)
2nd Row; Several contenders incl. Ritchie Gray, Ian Evans, Parling but its Maestri and O'Connell for me with, Ritchie Gray on the Lions tour. (Ireland and France)
Back Row; Such riches to choose from. Dusautoir, Harinordoquy, Parisse, Ferris, Croft and Morgan. There'as a real case for Croft before Warburton because of injuries - but for me its got to be the three Welsh boys, Warburton, Falatau and especially Lydiate (Wales all the way)

So there we have it. 9 Welshmen, 3 Irishmen, 2 Frenchmen, and 1 Englishmen.