Thursday, March 22, 2012

Budget 2012: Osborne Piles On The Agony

George Osborne's red box contained yet more good news for the very wealthy
Just one day after the coalition dealt a potentially mortal blow to the National Health Service, Chancellor George Osborne's budget providing no respite for the working class and poor. On the contrary, it again fulfilled cartoonist Steve Bell's ironic reversal of Karl Marx's dictum - 'From each according to their vulnerability, to each according to their greed'.

The one piece of supposed 'good news' had been trailed for a number of weeks - the rise in the income tax threshold from 2013. Under this change, people will have to earn at least than £9,205 per year before they start paying any income tax, and indeed this will save some working people a couple of hundred pounds per year. But there are three major problems with this. Firstly, approximately one third of adults do not earn enough to meet this threshold, so they will not benefit at all. Secondly, the saving amount is nearly insignificant when compared to the real terms pay cuts and loss of hours which huge numbers are facing. Finally, a big percentage of the discount will be swallowed up by a measure which was in the budget report but not announced by Osborne yesterday - cuts in working tax credits.

So much for the 'positive' side of things, which was no doubt trumpeted with an eye on bringing in a few more votes for the Lib Dems in the forthcoming local elections, and keeping the angry mobs away from the palaces a little while longer. It was important window dressing, since the evening news was largely filled with the gloating rich flaunting their own tax cuts.

Osborne claimed that it was necessary to cut the rate of tax for those making £150,000 plus per year, because the rich had changed their tax "behaviour" to exploit loopholes in the current rate. Before Christmas it was revealed that Her Majesty's Revenue and Customs had been complicit in tax avoidance - even going to lunch with corporate bosses for a chat over their tax arrangements. But rather than tighten the system up, Osborne simply slashed the wealthy's rate of taxation to 45p in the pound.

Similarly, corporation tax was reduced to 24% for next year and 22% by 2014. Osborne described this move as making UK corporation tax "dramatically lower" than in "competition countries", and showing that the UK was "open for business". Of course, the unwritten rules of economic globalisation dictate that these "competition countries" will now cut their own rates, meaning deeper cuts on global working class living standards will be necessary to balance the books.

Not entirely co-incidentally, Osborne declared he will soon be "publishing analysis" which he says will demonstrate his "need to make savings on welfare" of an extra £10 billion by 2016, on top of the huge cuts already being implemented. Why this money had to come from welfare, rather than, say, those who could afford it, the multi-millionaire did not explain. Neither did he attempt to justify a planned raid on Royal Mail pension funds, or what has quickly become known as the 'granny tax', whereby future pensioners are having their allowances worsened. Other indirect taxes on the poor were increased dramatically, with the prices of alcohol and tobacco being hiked. The cost of petrol is also set to rocket, even ahead of further Middle East turmoil, hammering those who rely on cars for work and basic needs, as well as feeding into further price rises for everyone.

Compared to his previous budgets and the Comprehensive Spending Review of 2010, the speech was arguably low key and low impact. However, it showed that far from the CSR revealing the entire scope of planned attacks, it merely served as a brutal beginning. As the economic crisis intensifies over the next twelve months, the sickeningly wealthy will doubtless demand that still further sacrifices are made. And Labour leader Ed Miliband's joke about it being the end of "we're all in it together" rang extremely hollow - they are.
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