Another day, another broadside at the Chancellor, this time from the Treasury Committee in its report on the Budget. George Osborne presumably feels a little bit like Peter Cech last night, except that I’m not sure George Osborne is keeping all the metaphorical balls out of his metaphorical net.
Restricting my comments to those matters relating specifically to tax gives me 4 areas to deal with, all of which I have commented on before, and in respect of which the committee appears to share at least some of my concerns:
1. Child benefit taxation
The committee shares my lack of enthusiasm for withdrawing benefits by way of taxation, which does appear to me to be inherently inefficient. They also point out that the system discriminates against single parents (two parents earning £49,999 each are much better off than a single parent earning £60,000, which surely cannot be right). And if you think that the example of two parents each earning £49,999 is ridiculous, if they are equal shareholders in a highly profitable family company it is pretty easy to arrange matters on this basis.
Also this will apparently require an extra half a million people to complete self-assessemnt tax returns, which against a background of swingeing cuts in HMRCs staffing levels is frankly bizarre. Joined up government, anyone?
2. Freezing of age related allowances
I have said before that I cannot get too excited about this one, particularly in the context of rising state pensions. Still, I have a lot of respect for John Whiting (director of the Office of Tax Simplification), so when he says it will cause significant ‘complexities’ I listen. I think inherent in his comments about the proposal being taken forward so quickly is the thought that the allowance might not have been withdrawn altogether for those born after 5 April 1948, but simply frozen until the personal allowance ‘caught up’ with it, which would have been a possibility. I am not quite so convinced by the ‘complexity’ point, however.
3. 50p tax rate reduction
Readers will be aware that I share the Committee’s doubts about the modest cost of this change to the Treasury, although I am hopeful that its effects in this respect will be counter-balanced by the introduction and enforcement of a General Anti-Abuse Rule. I am less hopeful of the impact of the cap on tax reliefs in this respect, which brings me neatly to:
4. The cap on available reliefs
Too right this will have a detrimental impact on charitable giving; a minimum tax rate at specific levels of income would be much more effective in this respect, in my view.
One final point. As a man who has always been keen to call a spade a spade, when will people stop using the mealy mouthed expression ‘quantitative easing’ and start referring to ‘printing more money’? The only government euphemism that annoys me more than this ‘collateral damage’, which I understand in English means ‘killing innocent people’. A polite request then to the government and civil servants to please stop insulting the intelligence of the British people, who after all elect you and pay your salaries.