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Budget Pain for some more than others

By Dark Politricks

Yesterdays budget was hard but expected. Leaks over recent weeks had softened up the public to prepare them for the massive cuts and tax rises that were announced yesterday.

The main parts of the budget were:

  • The increase in VAT to 20% next January.
  • The £1k rise in the personal tax allowance to £7,475k.
  • Capital Gains Tax will increase from 18% cent to 28%.
  • Employee National Insurance contributions will rise by 1% from April 2011. The Employer part won’t.
  • £11 billion of cuts in the benefits budget which will include a maximum cap on the amount that can be claimed on housing benefit and medical tests for those receiving the disability living allowance.
  • A 3 year freeze on the rate Child benefit is paid and abolishing Child Tax Credit for those earning over £40k a year.
  • A two-year public sector pay freeze although those earning under £21k a year will have a pay rise of £250 a year during these years.
  • A levy on banks is to be introduced which aims to raise £2.5 billion a year.
  • A cut in corporation tax to 24% over the next four years.

Full details of the budget can be found here.

What is clear from yesterday’s budget is that we are all going to get stung pretty badly and that no matter what the Lib Dem’s may claim the poorest in society are going to be hit the hardest.

The cap on the housing benefit payment of £400 a week on four bedroom or bigger houses will hurt many large families especially in the South East of England where house prices and rent is extortionately high. The VAT rise, which the Lib Dem’s admit is a regressive tax will hurt those on small incomes the most and the coming public sector cuts will also affect the poorest most as these are the people who most rely on them.

What about the rich banksters how will they be affected by yesterday’s budget? By the looks of it not much. There was no expected clamp down on bankers bonuses and the new banking levy is only going to bring in a feeble £2.5 billion which when compared to the amounts dished out each year in bonuses and salaries is a pittance. They also got given a nice little earner by having their corporation tax reduced to 24%.

So in reality they are going to once again escape paying their dues for the damage they have caused to the nation and with their multi million pound a year salaries and bonuses they are not even going to notice the rise in VAT. Added to that none of them rely on housing benefit to pay for their double digit roomed mansions and second houses in the Cotswolds and the cuts and freezes in tax credits are basically irrelevant to those on large salaries.

So the question must be asked. Is it really fair to be asking those in society who own the least to pay proportionality more to help clean up the mess created by those who own the most?

Anyone who answers in the positive should have their head examined and I am pretty angry that the Lib Dem’s, who I voted for, could not wield a bit more influence in the cabinet when deciding where the axeman’s blade should fall.

However we mustn’t forget that yesterday’s budget was only part one of the axemans dance as we still await details on the public spending cuts that are going to take a massive 25% out of each governmental department apart from Health and Overseas Aid. This is going to affect us all in ways that we cannot yet imagine and once again it will be the poorest that will be affected the most.

The banksters, super rich and even those on moderately high incomes of £100k or more will probably ride out the years of public sector cuts and ask themselves what all the fuss is about. I doubt many of them even have to visit an NHS dentist, GP or hospital very often or rely on Council provided amenities such as the local library or swimming pool. These are all the services that will be squeezed out of existence when the council decides it has to make a choice between collecting the rubbish bins or providing “nice to have” services.

Why overseas aid is being spared the axeman I do not know as it’s annual budget of £7.7 billion is a lot of money that would save a lot of pain. Yes you can make an argument that if we cut aid to the poorest nations then they will suffer for no fault of their own but are we really in the position to attack our own poorest whilst at the same time dishing out money to the overseas poor.

I totally agree with Andrew Gilligans piece in the Telegraph in which he questions why we are giving millions in aid each year to first world highly developed countries such as Singapore, Hungary, the Czech Republic and even Saudi Arabia who are all believe it or not recipients of our overseas aid budget.

Whilst agree that we should be supporting countries in Africa that do desperately need help because their own governments are unable or unwilling to help their own citizens I do think that we need to reconsider this ring fenced amount of £7.7 billion per year as surely the oil rich country of Saudi Arabia could forgo the £380k we gave it last year. That amount of money whilst not much when compared with the overall total is still enough to pay for 12 or more nurses for a year.

What is clear to see from yesterday’s announcement is that proportionality the poorest in our country will suffer the most and the richest have escaped fair treatment. For all the Lib Dem talk of a fair society and a fair spread of the burden it’s apparent that this was a Tory budget at heart.

Have the Lib Dem’s as Harriet Harman said sold their souls for ministerial cars? I really hope not and if they haven’t they need to make their voice heard a lot more loudly otherwise they will lose at least one voter by the next election.

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