Income tax will increase by stealth for 30 million people, since both the basic and higher rate thresholds have been frozen. This will mean £96 a year more for a couple who both work. A single pensioner on an average income will be more than £110 worse off as a result of Labour’s tax grabs.
National Insurance will be hiked for workers and for firms. This jobs tax will discourage businesses from hiring staff, cut people’s pay packets, and mean anyone earning £20,000 a year or more will be worse off.
Duties on alcohol will rise by above inflation yet again. A new cider tax, in the form of a massive ten per cent rise in duties on all cider, will punish responsible drinkers.
Council tax bills in Lichfield will hit (£1,453) from April – a rise of (130%) since 1997 – up from £632. Across the country, council tax will rise by £1 billion.
Inheritance tax will rise by stealth, due to the decision to freeze thresholds at £325,000 for four years. This will mean more and more homes will be caught in the inheritance tax net. The burden of stamp duty is also rising.
Anyone with a fixed telephone line will have to pay for a new yearly phone tax.
Business rates will rise by £1 billion for local businesses across the country; a business rates revaluation will mean soaring bills for many struggling firms from this April.
The Government’s total debt is forecast to hit £1,406,000,000,000, equivalent to every person in Lichfield owing £23,000 in debt. This will result in higher interest rates to pay for the higher state borrowing, meaning more expensive mortgages.
The Budget was published on 24 March. The small print reveals:
INCOME TAX HIKE
The Budget increases income tax by £2.2 billion. All income tax personal allowances were frozen at £6,475 in the Budget (Budget 2010, p.123). But the latest RPI inflation figure is 3.7 per cent. The revenue gain from not increasing all tax allowances in line with 3.7 per cent inflation would be £2.2 billion in 2010-11 and £2.8 billion in 2011-12 (Source: HM Treasury, Tax Ready reckoners and tax reliefs, 2009, Table 4).
At the 20 per cent basic rate of tax, this means that the Budget contains a £48 a year stealth tax on every basic rate taxpayer starting in April, or £96 a year for a two earner couple. Higher rate taxpayers will lose even more because the higher rate threshold was also frozen. More than 30 million income taxpayers are affected by these tax rises. A single pensioner on median income (£13,884) will be more than £110 worse off as a result.
NATIONAL INSURANCE HIKE
National Insurance will be increased from 2011 both on employers (destroying jobs) and on employees (meaning a smaller pay packet). National Insurance for workers is rising on anyone earning over £20,000. In total £6.3 billion will be raised in extra NI over two years (Budget 2010, p.121).
COUNCIL TAX HIKE
The small print of the Budget shows that council tax receipts in Britain are to rise by £1 billion this year (+4.0 per cent) from £24.8 billion in 2009-10 to £25.8 billion in 2010-11 (Budget 2010, p.193).
Across England, council tax bills are now £1,439 on Band D bills in 2010-11. By contrast, council tax was £688 in 1997-98 when Labour came to power (DCLG press release, 24 March 2010; DoE press release, 20 March 1997). This means council tax has risen 109 per cent – or an extra £751 a year on a Band D home. Since all other Bands are set as a percentage of Band D, every type of home has seen their bill double.
CIDER TAX AND BEER TAX HIKES
The 2008 Budget introduced an alcohol duty ‘escalator’, increasing duty by 2 per cent above-inflation every year (HM Treasury, Budget 2008, March 2008, p.69). This will deliver an indexed rise in tax revenues of £400 million in 2008-09, £505 million in 2009-10 and £625 million in 2010-11 (ibid., p.9). In this Budget, in addition, tax on cider was increased by 10 per cent, raising an extra £15 million a year (Budget 2010, pp. 81, 120).
INHERITANCE TAX HIKE
In the Pre-Budget Report, inheritance tax threshold was frozen in 2010-11 at £325,000. In this Budget, the threshold is frozen until 2014-15, despite rising house prices. This means that more and more homes will slowly be drawn into paying the tax (Budget 2010, pp. 120, 121).
STAMP DUTY HIKE
In addition to the new 5 per cent stamp duty rate, Labour are not changing the 1 per cent threshold for all buyers (£125,000), nor the 3 or 4 per cent thresholds (£250,000 and £500,000). This is despite the Budget forecasting rising house prices (Budget 2010, p.196). Stamp duty is thus being increased by fiscal drag. Although stamp duty is being cut for first time buyers, this is only for two years. By contrast, the new higher stamp duty rate is permanent.
BUSINESS RATE HIKE
Business rate revenues are forecast to rise by £1 billion in the Budget, up 4.2 per cent this year, from £23.7 billion in 2009-10 to £24.7 billion in 2010-11 (Budget 2010, p.193). A botched rates revaluation and deferred hikes from last year will mean soaring bills for many firms from April 2010. Many small firms will see their bill go through the roof.
PHONE TAX HIKE
Every home and business with a fixed landline or other data lines will pay a £6 a year tax per line + VAT on top, taking it to £7.05 per line. This is estimated to raise £440 million between 2010-13 (Budget 2010, p.121).
LABOUR’S DEBT CRISIS
Net government debt is projected to grow to £1,406,000,000,000 – £1.4 trillion – by 2014-15 (Budget 2010, p.189). This is equivalent to everyone being £23,000 in debt. The national debt will feed through to higher interest rates to pay for the higher borrowing.