Tory chancellor George Osborne smugly announced a budget for more cuts, more privatisation and more attacks on the poor today, Wednesday.
He slashed the top rate of income tax from 50p in the pound to 45p from next year—a massive handout to the fat cats on salaries over £150,000.
A millionaire will get at least £17,500 in free money from Osborne under the changes.
At the same time he cut corporation tax—tax on profits—by 1 percent immediately, taking it to 24 percent.
Still, the Institute of Directors was less than gracious at the windfall. “A reduction in corporation tax is a very positive step,” it said, “but we would still like to see a commitment to move to 15 percent by 2020. This would make us truly competitive.”
It is worth remembering that tax on profits was 52 percent under Margaret Thatcher.
The budget costing document reveals that the additional cut in corporation tax is set to cost £880 million by 2015–16—money that will no doubt come from extra cuts.
In fact Osborne also set a target for yet more cuts to welfare—£10 billion by 2016.
He also announced that two further cuts in 2013 and 2014 will reduce corporation tax to 22 percent. This is only 2 percent higher than a low paid worker pays.
Meanwhile low paid workers who get tax credits and child allowances will get less—and public sector workers face pay freezes.
He said the office for made up statistics, or the Office of Budget Responsibility as it prefers to be called, expects the country 'to avoid a technical recession”.
As it happens, this is based on a revision of its previous predictions and a higher interpretation of export statistics.
Nevertheless, buoyed with the news that economy was as bad as it was when he started the cuts, Osborne told MPs, “I can confirm today that there will be an automatic review of the state pension age to ensure it keeps pace with increases in longevity.”
In other words he raised the threat of workers having to work even longer before retirement.
At the same time, “age-related allowances” for pensioners will be frozen and restricted to existing recipients from April 2013. This will raise over £1 billion by the same date.
That is taking money from pensions to fund cuts in taxes on profits. This is how Osborne makes the budget supposedly “neutral”.
Dot Gibson, general secretary of the National Pensioners Convention, said: “The decision effectively means around five million pensioner taxpayers will no longer get additional reductions in their tax over the coming years—whilst those on the top rate of tax will see their bills reduced.
“There’s no fairness in that.”