The TUC has created a cuts calculator that lets you work out the impact of George Osborne’s cuts on your household income.
This is not my work, but I thoroughly recommend it. You can find it here.
Oct 212010
The Guardian has reported (and such is the significance I do not apologise for the length of the quotation) that:
With Athens’s ambitious fiscal consolidation programme now harder to achieve, the hunt for tax evaders has become even more pressing.
For the first time, said Kapeleris, SDOE inspectors will be knocking at the door of the nation’s well off – Greeks with huge homes, private pools, superyachts and secret bank accounts abroad.
"All those with inexplicable wealth," he added. "The doctors and lawyers, architects, construction companies, singers, civil engineers ‚Ķ people who have bank accounts with millions of euros, deposits that just don’t add up."
Using Google Earth, the unit recently announced it had discovered some 50,000 "undeclared" swimming pools as well as tracing the owners of an estimated 2,500 state-of-the-art pleasure boats moored in marinas around the capital. Politicians with power cruisers costing as much as €1.5m, but which have never appeared on tax returns, have been outed.
Bank accounts abroad have also been targeted as Papandreou, in an unprecedented step, has taken the fight against tax evasion beyond Greek borders.
"We have opened bank accounts in Liechtenstein and plan to open others in Switzerland and the City of London," Kapeleris said. "We have discovered deposits that make the mind boggle, huge amounts that simply do not correspond to professed professional activity."
That is good for Greece. I hope the IMF is giving them the funding they need to pursue this activity.If only the UK Treasury would show the same initiative.
And I also hope that the UK Treasury and UK banks are providing them with all the cooperation they need.
Oct 212010
The Guardian has reported that:
Retail sales in Britain unexpectedly fell last month as consumers started tightening their belts ahead of the government’s austerity measures, fuelling fears that the economic recovery has stumbled.
The down turn is clearly underway.
And if you are in doubt they also reported:
Government borrowing hit a record high in September, jeopardising the chancellor’s plans to wipe out the deficit over the next four years.
But, just at the time that we so obviously needed an economic stimulus George Osborne gave us the exact opposite. And business cheered him.
Oct 212010
I note the FTSE is at a near high for the year this morning.
The market loves cuts.
They are idiots. You cannot make money in any business without selling your products. George Osborne sucked demand out of the economy yesterday and yet the market is celebrating. Profits must fall, and yet the market has gone up.
I’ve said it before, and I will no doubt say it again: those who speculate in the city clearly have no idea what they are doing.
Oct 212010
I admit that I feel sick this morning. Now that may be because I have both my sons off school, feeling quite unwell and I am coming down with what they have got. But I do not think I am sick because of them: I think I am feeling sick for them, and millions of other young people of their generation.
The papers are full of analysis of what George Osborne had to say yesterday. It is very obvious that his cuts focus most heavily on the poor, on women, on children, on the disabled, on those with learning difficulties, and because so many from racial minorities work in the public sector, on them as well. I’m sickened that my children will have to spend their teenage years in a country that will be torn apart by the deliberate choice of the Conservative Party and the Liberal Democratic Party in this country. I make clear, that is a choice. I know that we could have had a Green New Deal. I, and colleagues, have shown we can afford it. I know it could have rebalanced our economy.
What really sickens me is that I know that I will see my sons going through their teenage years without there being hope in our country. What hope will there be of employment for them? What incentive to create a business? What reason to take on the debt of going to University? In essence, what am I going to do apart from firing them with the desire for a different world to motivate them to play a full part in this society in which they live when those who are leading that society at this point of time have rejected all hope for the people of this country in their sacrifice to the bankers of this country?
The sight of ConDem backbenchers cheering the creation of millions of unemployed people yesterday; their pleasure at seeing so many people’s lives blighted by the poverty they will deliver and the backslapping on the frontbench for George Osborne having delivered the greatest economic body blow to this country it is received for generations might have brought this sickness on. But this is no superficial complaint. A deep malignancy has been unleashed upon the United Kingdom and the person who is not worried to their core about the consequence has not appreciated just how serious the issue is.
I’m trying to be as politically correct as possible here, but it’s not going to work. The FT has reported:
George Osborne pleased businesses by protecting the science budget and softening the impact of the spending review on infrastructure projects, but there were warnings that the government now needed to turn this into a clear strategy for growth.
“Business has been clear: the deficit must be tackled, no matter what. The CSR does the job of setting out how this will be done,” said David Frost, director-general of the British Chambers of Commerce. “We were disappointed that the Government succumbed to political ring-fencing of some spending areas, when it is clear to business that a bigger boost to investment in productive infrastructure and exporting would be the best bet for growth.”
But, he added: “The CSR alone is not enough. The government must now deliver a clear strategy for growth – which in turn will give companies, and especially small and medium-sized enterprises, the confidence to invest. Perceptions matter. Businesses and government must work together to deliver a real year for growth in 2011. This is the only way that the private sector will be able to take up the slack.”
The proverbial is not the BCC, of course: the proverbial are what you think they are, but they might as well be one and the same.
The government will run a deficit as a matter of fact, whatever it does, if it does not change three things because of the following accounting identity, which must hold true:
Budget deficit = Private Savings minus Private Investment plus Current Account Deficit
Business is doing 92% of savings right now.
Households are doing it by cutting their mortgages.
Banks are helping by reducing lending.
Business is not investing – which is why it is saving so much.
And the prospect of an improvement in trade is near enough zero.
So the deficit will continue or grow – as I predict – whatever George does.
And a plan to cut the deficit is meaningless in that case – because it is beyond his control. He can encourage more spending. But he didn’t. Everything he did today will discourage it.
He can encourage more investment. And he did – just a tiny bit – but overall government investment is to fall heavily, so business investment is likely to fall still further.
And nothing we do is going to increase imports.
So the BCC show themselves to have not a clue what they are talking about in saying what they do.
It was only an economic stimulus package – with more spending and a cancellation of a VAT increase – that could have worked today. But we didn’t get it. So there’s not a hope the BCC will get what they now want. And that’s because they actually asked George to deliver a recession today – which is what they’re likely to get.
Repeat after me:
Jersey’s not a tax haven
Jersey’s not a tax haven
Jersey’s not a tax haven‚Ķ‚Ķ
Which is why the Jersey Evening Post reports today:
Eighteen of Jersey’s [tax exile]residents paid less than £10,000 in tax last year, the Assistant Treasury Minister said yesterday.
The figures were revealed during States question time as Deputy Trevor Pitman quizzed Deputy Eddie Noel over the tax contributions paid by some of the Island’s richest residents.
Deputy Pitman said that many middle earners were paying three times more tax than some of Jersey’s richest residents.
Now start again:
Jersey’s not a tax haven
Jersey’s not a tax haven
Jersey’s not a tax haven‚Ķ‚Ķ
Oct 202010
It is rare that I agree with Chas Roy-Chowdhury at the ACCA, but I do on this one:
Chas Roy-Chowdhury head of tax at ACCA said: "If the govt wants to fill the so -called tax gap and wants the tax system to operate effectively then they should not cut [ HMRC jobs and budget.]
We have already seen at least 20,000 jobs cut since 2005 therefore HMRC have already done there part. We cannot see how HMRC will be able to cope if it has another 20,000 head count reduction."
I gather it’s not 20,000. It’s only 10,000 according to reports in some papers today – which is 14% of staff.
But the tax gap will rise significantly as a result. I guarantee it. And this is sheer folly and shows just how ideologically driven these cuts are.
The thought that Osborne could not organise the proverbial in a brewery does cross my mind, often.
As Jonathan Freedland said in the Guardian this morning:
A quick look at the figures confirms that, until the crash hit in September 2008, the levels of red ink were manageably low. The budget of 2007 estimated Britain’s structural deficit – that chunk of the debt that won’t be mopped up by growth – at 3% of gross domestic product. At the time, the revered Institute for Fiscal Studies accepted that two-thirds of that sum comprised borrowing for investment, leaving a black hole of just 1% of GDP. If the structural deficit today has rocketed close to 8%, all that proves is that most of it was racked up dealing with the banking crisis and subsequent slump – with only a fraction the result of supposed Labour profligacy. After all, even the Tories would have had to pay out unemployment benefit.
This is the reality: Labour managed the economy well until the bankers broke its back.
But that was banker’s fault not Labour.
Osborne’s lie is that this was Labour’s fault.
That is a lie.
He knows it is a lie.
And he trades on that lie.
But he can’t build a solution based on that lie. And that’s why his solution will not work. He’s tackling the wrong problem with the wrong prescription at the wrong time.
