George Osborne really hasn't got a clue, has he? He has a plan. He's going to reassess all of the people on incapacity benefit and cut it for those found to be malingers. Billions will be saved as the lazy are found out and have their benefits chopped.
There's just one problem with his plan. The system is not designed to get people back to work. Doctors are not encouraged to get people into rehabilitation schemes and people are penalised for trying to get better. As a result, everyone plays the game.
George's plan may save a few quid but the concept that all of the recipients of Invalidity benefit will turn up at the doctors and say "I'm better, cut my benefits", is quite frankly bonkers.
As to the plan to freeze the pay of public sector workers. Does this apply to Councillors allowances. Anyone on over £18,000 a year will have their pay frozen. He talks of public servants earning more than the Prime Minister. What about people such as Tory Melvin Cohen who's just been awarded a £7,500 allowance for a few hours work attending meetings. I'm all for cutting a few taxes, but the the Tories should get their own house in order first and sort out the greedy councillors who stack up allowances like alcholics stack up drinks at the bar.
4 comments:
Rog
I agree that any freeze on public sector pay should include allowances and salaries paid to councillors and MPs. The only problem is, they will find a way around it. Just as MPs came up with the wheeze to grant themselves a £10,000 “communications allowance”, councillors will come up with something similar - like a new “letter opening” allowance - which will push up their pay without affecting the “basic” allowance.
I think it was a huge mistake by George Osborne to promise to stick to Labour’s new 50% top tax rate. All economists agree that this will be a revenue neutral tax - i.e. the amount it raises is offset against the amount it costs to collect.
Labour introduced this tax out of spite. In order to placate the hard left, it has reverted to 1970s talk of soaking the rich. Osborne is too frightened to scrap the tax because he doesn’t want to be accused of producing a budget which benefits the well off.
But the reality - as has been proven time and time again - is that high tax rates damage the economy because they stifle enterprise and cause the wealth and job creators to pack their bags and leave. Even people who do not earn enough to pay the top rate have aspirations to improve themselves, and high tax rates reduce all incentives to work.
The public are agreed that there is a need for savage spending cuts to try and save the country from bankruptcy. But higher taxes will be counter productive. Lower taxes across the board will stimulate the economy and raise total tax revenues through increased VAT and corporation tax receipts caused by a growing economy.
David,
Has anyone ever done a study to show what rates would raise the most money & have the least negative effect.
Yes, plenty have... Most famously the Laffer Curve...
http://www.youtube.com/watch?v=fIqyCpCPrvU
As you can see is somewhat problematic though!
Dan,
The thing that really get me about taxation is the way it is so ideological on the one hand and dishonest (stealth taxes) on the other. What no one says is that it's the (lower) middle classes who are really clobbered, because they don't have the "move to Switzerland" option.
We probably couldn't have a much more inefficient collection strategy with hundreds of different rules, taxes and duties. Each of these has its own department and staff and each has a set of rules which require expensive accountants to understand.
As someone who runs a small business, it is a huge cost in time and money to keep on top of it all.
Heres just a few of the different taxes which we have to deal with which add costs to our company
Income Tax,
Employers National Insurance,
Employees National Insurance,
VAT,
Corporation tax,
Business rates,
CSA deductions,
Parking costs,
Road Tax,
Congestion Charge,
Stamp duty,
Planning fees,
Fuel duty
I'm sure that there's a few others which cost my firm or my employees money which I've forgotten about. I've no idea in total what the cost is of all of these, but I think small businesses are an over-milked cash cow.
That's why when people talk about "The Barnet Bond" I worry. Things like the cut in the VAT rate have actually helped us in a difficult period, and when I hear people say it's made no difference, I find it infuriating, because as a service company, we've been hit by the recession.
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