Sunday, 16 March 2008

Yet more ‘unintended consequences’ in the Budget

Thanks for all the many comments I received about my budget post on ‘unintended consequences’.

Lest I get accused of only being concerned about what happens to rich people (I had rather hoped that my work with the Prince’s Trust might indicated that I had wider interests!) the ‘unintended consequence’ that most appalled me in the Budget was the scrapping of the 10% tax band which means that a large number of people earning less than £16,000 pa actually pay a lot more tax – to the tune of £60 per month in the worst case. £500 a year to such people is a huge proportion of their disposable income.

What really gets me is that we pay for a hugely expensive Treasury where one expects there to be boffins with computer models who can predict to the last penny what any change in fiscal policy will mean. So why in the last six months since Darling took over as Chancellor have there been so many ‘back-of-a-fag-packet’ changes where these ‘unintended consequences’ were not spotted BEFORE the policies were announced?

Another ‘unintended consequence’ of the inept handling of the new CGT regime also surfaced this weekend. HMRC is now so overburdened with requests for Clearance Certificates on business owners selling up before the 5th Apr 08 deadline that it can’t cope! If you don’t get such a certificate, the tax treatment is far from secure. See The Times 14th Mar 08 HMRC backlog agitates owners eager to sell before rise in CGT

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