I've taken one last look a some of the absurd budget assumptions implicit in the claims made by Osborne.
The data I'm using is here:
I have already done some work on this here, but then noticed the problems in the self assessment line, and so did a little reworking because if it almost inconceivable that the income raised by self assessment of income (largely, but not entirely from self employment) will sky-rocket in 2014-15 as this suggests.
My new analysis is this:
You will note that self assessed income tax as a proportion of the whole jumps 3.7% in one year. Now I think that unreasonable, but what it does imply is that HMT think profits will rise, dramatically. Supposing they are right I then reworked the corporation tax numbers using solely onshore - because that is the fair comparison. If corporate profits rise the same way self assessed profits do then corporation tax receipts, if Osborne had not been so intent in giving them away, would be on this basis £45 billion cumulatively greater than he forecasts over the period.
Now, let's be honest: neither number is right. Profits are not going to rise as per this forecast: there is absolutely no way they can from the current position. They may rise; that I do not dispute, since we always do eventually come out of recession (although I note Japan); but there is no way they will rise as shown.
But it's still true that there's massive and unaffordable corporation tax give away however the matter is viewed.
And it's still true that these forecasts for tax revenue are utterly unsustainable, which is the key point.
And in that case, given an election is now two years away, the need for Labour to plan for what happens in that case is now pressing.
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Instead they’re conspiring with the Coalition to remove benefit claimants from the rule and protection of law. Disgusting and shocking. Forget about Labour, they’re not interested.
The OBR claims to be ‘an independent financial watchdog’, yet its forecasts are consistently skewed to reflect the neo-liberal ideology of the Coalition. Some random error is of course inevitable, but forecasts that are consistently wrong in the direction that favours ideology are simply lies, deliberately intended to deceive the electorate.
I’m semi-amused that they even try to propagandise their web address – “budgetresponsibility.independent.gov.uk”. Pathetic.
Well, the Coalition inherited an economic disaster so not much change there then!
Yes there is
Labour did not create one
The Tories have
the debt will have an additional 500 billion added to it when these lot are voted out. the deficit will be running 120 billion per year for as long as they have been in power. then we will be 1.150 trillion in debt. labour would be better off not wanting power.as this guy will never change course, for to do it this guy would be hung drawn and quartered.
The Coalition have no mandate. What the Tories should have done when, so they say, they discovered that things were worse than they realised so their stated policies were irrelevant, was formulate new policies and go to the country with them. They didn’t, so on that basis they have no mandate. The debts are odious. They can be cancelled. It shouldn’t be too much of a problem as I imagine many other countries will be doing the same thing from necessity.
Is it the changes to the CFC regime that is resulting in the offshore falling so much? If so, then what are the tax changes that are resulting in the corporate tax not growing given that the rate stops going down at 20% in 2015? They do seem to assuming very high rates of growth in business investment from 2014 on, would that depress the corporate tax assumptions significantly?
Just guessing but isn’t the assumption that self assessment rates will rocket in 2014/15 related to the reduction in the additional rate of income tax and high earners therefore deferring payments till then?
That’s 2013/14
But the balancing payment for self-assessment wouldn’t be due until 31 January 2015.
But if that was the cause there would then be a trail off
There isn’t of any consequence
And it would also require massive profit distortion, which I think very unlikely
Hardly. It would arise from dividends being delayed from 2012/13 to 2013/14.
It then drops back to a level which is consistent. It suggests a single year anomaly such as a change in tax rate.
You clearly have a problem reading stats: the increase remains
It looks lower prior to the spike due to deferral of dividends from 2012/13 to the lowering of the additional rate in 2013/14 (hence increased self assessment income tax during 2014/2015). And the rate of tax through self assessment is clearly lower and stable thereafter.
That’s an unsustainable argument – because as is obvious there is no downturn
And as you’re very obviously a timewaster with a PhD don’t bother to call again
I am referring to the % of income tax self assessed which is what you talk about above. Which line are you referring to now?
The same line
And your logic does not work
Shifting impacts two related years – not periods thereafter
This pattern once established recurs so you cannot be right
I also very strongly suspect HMT did not plan for this level of abuse
And because your argument is unsustainable this debate is closed
Milton Friedman was in his youth working on the side of Irving Fisher on the Chicago plan which would introduce 100% reserve banking and sovereign created debt free money.
It is interesting to note him here, because although he went over to the dark side of neoliberalism he always used to say that you can use a crisis to introduce reforms.
In he recommended helicopter money thrown into the economy when banks were not lending and taxes were short.
Stephen Zarlenga has this inforamtion here
http://www.monetary.org/the-1930s-chicago-plan-vs-the-american-monetary-act/2009/08
I mention this, because although as a socialist I feel very strange recommending Friedman, this crisis could be turned into an opportunity for government to say “there is no alternative” and undo neoliberalism by creating government money to re ignite the economy.
Lord Adair Turner recommends this in his speech:
http://www.cass.city.ac.uk/news-and-events/news/featured-news/are-concerns-over-inflation-inflated
(scroll down the web page).
This is also recommended by Martin Wolf:
http://www.ft.com/cms/s/0/9bcf0eea-6f98-11e2-b906-00144feab49a.html#ixzz2KmURCTKM
This would also give labour a chance to say there is no alternative but to introduce land tax, energy monopolies tax, wealth tax, and mansion tax.
There is a way out, unless Labour want to end up like the Hapless and unpopular Hollande. Ironically, they need to listen to Friedman advice to use the ideas lying around to take advantage of the crisis, like the neoliberals did.
A Land Tax will precipitate a banking crisis by stripping away even the pretence that the banks have any genuine assets. Although I think it’s necessary and inevitable it may not be popular with any administration therefore.
Agree with Bill Kruse.
Yes, house price inflation has had a most pernicious effect on the economy, yes, house prices in the UK are absurdly overvalued (maybe by 100%?) BUT
if prices fall now then the banks are insolvent, at which point it all goes horribly wrong. I suspect this is behind Gidiot’s otherwise insane proposal for the Govt to subsidise people’s mortgages. He knows that, in words of Warren Buffet, when the tide recedes you find out who wasn’t wearing a costume !
It only all goes horribly wrong if those are the only banks we have. If we have in place a national network of council-run local banks which had nothing to do with the others or indeed with mortgages we could let the main banks collapse as they should and still be able to trade while the apocalypse was taking place.
The Mansion tax would be redundant with LVT since most of the value of £2m+ homes is in the location/land. However if there is still substantial value in the building I would have no objection to a wealth tax on that, but I think that there would have to be a threshold for ordinary homes since a building can depreciate badly without constant maintenance.
Martin Wolf supports LVT and even Friedman wrote that a tax on land value is the least worst tax.
Has Martin Wolf thought it through, I wonder? Which once again is not to say I disagree as I don’t… and Friedman probably never envisaged we’d have a zombie banking system kept alive by the pretence its assets are actually worth anything. Lots of those pretend assets are mortgages and if there were suddenly new millions of acres made available for building on or the value of land suddenly plummeted… well, the banks would have trouble surviving. I doubt any of the three main parties would be keen on that.
At the risk of repeating myself, I believe it’s time for a re-alignment of politics, away from Right and (supposedly) Left and into pro and anti neo-liberalist parties. The reason I say this is because, when I talk to traditional, dyed in the wool Tory friends and acquaintances, we seem share many more concerns that we once did.
Look what happened in Poland. When it was controlled by Communism, the political battle was between the workforce and the dead hand of central control. With hindsight, it looks to me as though the workforce decided to focus its sights on the clear and present danger of continued Communist control – and won. And then Walensa became a right wing president!
The point is simple; we the people need to focus on the clear and present danger that neo-liberalism repesents. If we did, we just might achieve a worthwhile result.
“The point is simple; we the people need to focus on the clear and present danger that neo-liberalism repesents. If we did, we just might achieve a worthwhile result”
After ‘corrie and ‘stenders then…unless that documentary about the sex life of the lesser endowed member of parliament is on.
I doubt that the “free” press will be interested though.
Richard
The Paye as you earn figures are absurd, `forecast` to grow by 30%, despite the single person’s allowance being expected to go up to £12.5k, in the five years to 2017/18, Corporation tax grows by 6% over the same period. As Ivan says, these figures are designed to justify the giveaways for the rich and leave a scorched earth for Labour who will be faced with either raising taxes substantially or massively cutting services. It will be Healey cleaning up Barber’s mess all over again.
IF Labour get elected. I note that Farage has now decided to “do a LibDem” and target Labour voters.
So having noticed how his party (sic) benefited from a lower LibDem vote recently he has decided to accept the LD vote and work to draw Labour voters to UKIP.
He may well (finally) get enough seats to bargain for a coalition….but the bad thing is that it will draw Labour voters to UKIP.
http://www.bbc.co.uk/news/uk-politics-21908204
@JohnM: Why on earth would Labour voters (or for that matter Liberal Democrats) vote for the UK’s “Conservative Tea Party” UKIP? I have yet to hear or read any sensible reason behind this.
@ Rod Brown – simple: there’s a strong populist, even racist, component on the Labour Party, made up of the red-neck blue collar workers, who feel they have been betrayed by the Labour Party, especially by the Labour Party leadership, felling the Party has betrayed their interests (considering the actions and “thinking” of Tory Bliar, it’s quite hard to argue to the contrary), who would willingly vote for a Party they see as championing the interests of the ordinary working man. Shades of 1933 and NSDAP – the last three letters of which translate as “the German Workers’ Party”. The German middle and working class were conned by that fake prospectus, and UKIP – which IS a Little Englander, Poujadist and frankly incipiently racist Party – is peddling the same nostrums, and the same nonsense. And there are plenty of ready listeners, as Eastleigh demonstrated.
Andrew Dickie says:simple: there’s a strong populist, even racist, component on the Labour Party, made up of the red-neck blue collar workers…
And you base that on what exactly?
I’m always reminded of Neil Kinnocks speech>
“If Margaret Thatcher is re-elected as prime minister on Thursday, I warn you. I warn you that you will have pain — when healing and relief depend upon payment. I warn you that you will have ignorance — when talents are untended and wits are wasted, when learning is a privilege and not a right. I warn you that you will have poverty — when pensions slip and benefits are whittled away by a government that won’t pay in an economy that can’t pay. I warn you that you will be cold — when fuel charges are used as a tax system that the rich don’t notice and the poor can’t afford.
I warn you that you must not expect work — when many cannot spend, more will not be able to earn. When they don’t earn, they don’t spend. When they don’t spend, work dies. I warn you not to go into the streets alone after dark or into the streets in large crowds of protest in the light. I warn you that you will be quiet — when the curfew of fear and the gibbet of unemployment make you obedient. I warn you that you will have defence of a sort — with a risk and at a price that passes all understanding. I warn you that you will be home-bound — when fares and transport bills kill leisure and lock you up. I warn you that you will borrow less — when credit, loans, mortgages and easy payments are refused to people on your melting income.
If Margaret Thatcher wins on Thursday, I warn you not to be ordinary. I warn you not to be young. I warn you not to fall ill. I warn you not to get old.”
This is really an interesting read.
Especially when you consider the Capital Cost vs Labour Cost graph.
http://www.zerohedge.com/news/2012-12-01/workers-world-unite-first-consider
Ever so un-slightly slanted…but