Tory chancellor George Osborne smugly announced a budget for the rich on Wednesday of last week.
He slashed the top rate of income tax from 50p in the pound to 45p from next year—a massive handout to fat cats on salaries over £150,000.
Some 14,000 millionaires will each get an extra £40,000 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. That money 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 (OBR) as it prefers to be called, expects Britain “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.
The OBR says the economy will avoid recession as it expects increased investment from the bosses—though it does not say why this would happen. It also says Britain’s main export markets will be in recession, but exports will apparently rise.
The economy is as bad as it was when Osborne started his cuts.
Yet he will continue with them. He said, “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. He is proposing to bring forward increasing the retirement age to 70.
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.
That is taking money from pensions to fund cuts in taxes on profits.
This is how Osborne was able to make the budget supposedly “neutral”.
From next April, Osborne will freeze the personal allowance on pensioners’ incomes—the amount at which they have to start paying tax—for those aged 65 and above at £10,500 and £10,660 for over-75s.
Treasury figures show 4.5 million people will be £83 a year worse off.
And the 360,000 people who turn 65 next year will lose an average of £285 a year.