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Thursday, March 22, 2012 

Picking over the bones.

The tradition of the last few years under both Labour and the coalition has been for the budget to only come under proper scrutiny on the day after the night before. This time round, thanks both to the unprecedented amount of leaking (or spinning) and the coalition apparently giving up even the pretence of fairness it was mostly filleted yesterday.

As a consequence we've been left with mainly bones to pick over. It was already apparent yesterday that the removal of the 50p top rate of tax was a purely ideological move, rather than one based on evidence, so more interesting was the Institute of Fiscal Studies' verdict on whether the other tax changes on the rich yesterday would raise the amount Osborne claimed they would. To no one's great surprise they regard it as extremely doubtful, and they quite rightly deride the rise in stamp duty to 7% on houses worth over £2m. Keep in mind the continuing claims today (including from Vince Cable) that the 50p rate raised almost nothing when it in fact pulled in about £1bn, despite massive one-time only avoidance, when it's announced that the "mansion tax-lite" really does bring in almost nothing.

The other major point raised by the IFS was the ever increasing numbers who will find themselves in the 40p tax bracket. With Osborne slashing corporation tax and deciding that millionaires need to be incentivised further in order to get the economy growing, the shortfall has to be found from somewhere. Welfare can't be cut by much more, neither Labour or the Tories will hear of cutting back on defence and abandoning the pretence we're still a world power, and the NHS and education are also sacred cows. What Osborne and the Lib Dems therefore give with one hand through the raising of the personal tax allowance has to be taken away with the other, and the (upper) middle classes are the ones footing the bill. With big business and the City having such a stranglehold over politicians regardless of party, crying that they'll go wherever they're taxed the most competitively, it's something they're going to have to get used to. Don't like the prospect? Start organising, stop complaining about the "scroungers" at the bottom and take on the boss class. Stop laughing at the back.

Encouraging is that while the Times was probably the most positive paper of all about the budget, the Sun was only slightly less critical than the Mirror. Where previously you would have thought the paper would have applauded such openly Thatcherite measures, it wasn't impressed one iota by the dropping of the 50p rate. Yes, it cheers the dropping of the corporation tax rate (can't think why) and does the usual moan about EU regulation, but otherwise it gives Osborne a kicking in return for the one the paper says he administered to its readers. Add in the likely response to tomorrow's brought forward announcement that booze will shortly have a 40p a unit minimum price, and this might just be the point at which the tide begins to properly turn against the coalition, as the first poll after the budget suggests. We can but hope.

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