George Osborne is fighting back, aware that tax cuts for the rich and benefit cuts for the frail shock even natural conservatives. But this is just the start
Saturday is windfall day for the 267,000 top taxpayers. As the highest rate falls to 45% they get an average £10,000, while the 13,000 richest win a £100,000 bonanza. Will they reach for the How to Spend It supplement of the FT, looking for luxury baubles? Most may barely notice this little extra.
In a speech of spectacular mendacity even by his own standards, George Osborne told a group of Morrisons staff this week that the 50% rate had caused the amount collected to "fall by billions of pounds as the wealthy paid less". You might think he'd be ashamed to admit failure to block loopholes or chase avoiders and evaders: if people cheat on benefits, he doesn't relax the rules to make cheating legal. While benefit fraud costs less than £1bn, or 0.7% of payments, tax avoiding/evading costs the Treasury at least £70bn a year, as revealed by the Guardian's Tax Gap series.
The rich protest they contribute most in tax: indeed they do, as wealth and income is sucked upwards. The top 10% own 44% of everything. If they owned and earned everything, they'd contribute 100% of Treasury income, and no doubt protest yet louder at the nation of dependents they carry on their backs.
Osborne used figures for the first year of the 50% rate, 2010-11, when a year's notice let the rich shift £16bn into the previous tax year, and only pay the old rate. Many did that last year, too, delaying income until after Saturday. So instead of raising the expected £3bn a year the 50% rate only brought in £1bn – a negligible dent in Osborne's growing deficit. A 50% rate would raise more if permanent loopholes were closed, but Osborne never wanted the tax to work. As he told Morrisons staff: "We cannot have a top rate of tax that discourages people from living here … we are welcoming entrepreneurs and wealth creators and the jobs they bring with them".
Does he mean the creative soul at the head of Centrica, whose 6% gas price rise earned him £4m? Or Rich Ricci's £18m for running the disgraced Barclays? Or the Capita chief executive's £8.5m, earned from profits in public sector contracts? Ed Balls's figures show 643 bankers are winners in this beano, 40 due for £100,000 each.
The £1bn given out to the top few on Saturday could instead have prevented the bedroom tax from evicting 660,000 people from secure social homes, supposedly saving £465m. It could have prevented council tax benefit cuts for the poorest, supposed to save £480m, though councils expect soaring arrears on rent and council tax. Bailiffs will go in to distrain and evict, but no bailiffs knock for the missing billions "tax-planned" away at the top.
Osborne's jaw-dropping effrontery often leaves opponents winded. How could he claim "nine of 10 working households will be better off as a result of the changes we are making"? By selectively using only the announcements he made last month, not the cuts coming in now or still to come. Even that is dubious, since the Treasury's own "Impact on households" budget (charts 2E and 2F) shows only three out of 10 are better off – and all three are in the top half, with all in the bottom half being worse off.
Take everything together, with VAT rises and benefit cuts, and the Institute for Fiscal Studies says families are £891 worse off this year. Almost everything Osborne does helps the upper, not the lower, half. He boasts that his £1bn spent on raising personal allowances is to help the lowest paid, but it doesn't much. The IFS says three-quarters of it goes to those in the top half. So if his audience were ordinary Morrisons floor staff, nothing much is coming their way. If they are parents, they had a cut this week.
What a gift the Philpott case has been, a bizarre and monstrous distraction to poison the public debate in the week benefits are cut while the richest cash in. In a leader, the Times calls for benefits to be paid for only two children per family. Clueless or callous, they think children are what Ann Widdecombe calls benefit "meal tickets". Rowntree and Child Poverty Action Group show the £9 a day for a child is at least £10 a week too little: most parents go without some meals to feed their children. Research in Why Money Matters shows that the poorest families are most likely to spend extra money on their children. What would the Times do? Most of the tax credit bill is paid to working parents, including full-timers on the minimum wage, to keep children above the breadline. Would the Times support a living wage, or should those families use food banks?
Defenders of social security fight back feebly with mere facts. Tell people that most of the poor work, tell them only 10% of the Department for Work and Pensions bill goes on those out of work, or tell them the dole in the UK is almost the lowest among the richer EU nations. But if the facts don't the fit people's belief, they are soon forgotten.
Better to tell true stories about the cuts, like that of Martine White, a thalidomide victim who's blind in one eye, partially deaf, uses a stairlift and a wheelchair and is waiting for spinal surgery. She worked until 2004, when she had a brain tumour removed. But she's losing £110 a week and has been told to attend a work training course. That's no one-off error when official figures show more than 1,700 disabled people died last year within weeks of being found "fit for work".
The government put up a ferocious fightback this week, rightly sensing that cuts for the frail and party-time for the mega-rich risk shocking even natural conservatives. This is just the start. From now on there will be hundreds of thousands more Martine White stories – while Philpotts are rare.
Guardian
In a speech of spectacular mendacity even by his own standards, George Osborne told a group of Morrisons staff this week that the 50% rate had caused the amount collected to "fall by billions of pounds as the wealthy paid less". You might think he'd be ashamed to admit failure to block loopholes or chase avoiders and evaders: if people cheat on benefits, he doesn't relax the rules to make cheating legal. While benefit fraud costs less than £1bn, or 0.7% of payments, tax avoiding/evading costs the Treasury at least £70bn a year, as revealed by the Guardian's Tax Gap series.
The rich protest they contribute most in tax: indeed they do, as wealth and income is sucked upwards. The top 10% own 44% of everything. If they owned and earned everything, they'd contribute 100% of Treasury income, and no doubt protest yet louder at the nation of dependents they carry on their backs.
Osborne used figures for the first year of the 50% rate, 2010-11, when a year's notice let the rich shift £16bn into the previous tax year, and only pay the old rate. Many did that last year, too, delaying income until after Saturday. So instead of raising the expected £3bn a year the 50% rate only brought in £1bn – a negligible dent in Osborne's growing deficit. A 50% rate would raise more if permanent loopholes were closed, but Osborne never wanted the tax to work. As he told Morrisons staff: "We cannot have a top rate of tax that discourages people from living here … we are welcoming entrepreneurs and wealth creators and the jobs they bring with them".
Does he mean the creative soul at the head of Centrica, whose 6% gas price rise earned him £4m? Or Rich Ricci's £18m for running the disgraced Barclays? Or the Capita chief executive's £8.5m, earned from profits in public sector contracts? Ed Balls's figures show 643 bankers are winners in this beano, 40 due for £100,000 each.
The £1bn given out to the top few on Saturday could instead have prevented the bedroom tax from evicting 660,000 people from secure social homes, supposedly saving £465m. It could have prevented council tax benefit cuts for the poorest, supposed to save £480m, though councils expect soaring arrears on rent and council tax. Bailiffs will go in to distrain and evict, but no bailiffs knock for the missing billions "tax-planned" away at the top.
Osborne's jaw-dropping effrontery often leaves opponents winded. How could he claim "nine of 10 working households will be better off as a result of the changes we are making"? By selectively using only the announcements he made last month, not the cuts coming in now or still to come. Even that is dubious, since the Treasury's own "Impact on households" budget (charts 2E and 2F) shows only three out of 10 are better off – and all three are in the top half, with all in the bottom half being worse off.
Take everything together, with VAT rises and benefit cuts, and the Institute for Fiscal Studies says families are £891 worse off this year. Almost everything Osborne does helps the upper, not the lower, half. He boasts that his £1bn spent on raising personal allowances is to help the lowest paid, but it doesn't much. The IFS says three-quarters of it goes to those in the top half. So if his audience were ordinary Morrisons floor staff, nothing much is coming their way. If they are parents, they had a cut this week.
What a gift the Philpott case has been, a bizarre and monstrous distraction to poison the public debate in the week benefits are cut while the richest cash in. In a leader, the Times calls for benefits to be paid for only two children per family. Clueless or callous, they think children are what Ann Widdecombe calls benefit "meal tickets". Rowntree and Child Poverty Action Group show the £9 a day for a child is at least £10 a week too little: most parents go without some meals to feed their children. Research in Why Money Matters shows that the poorest families are most likely to spend extra money on their children. What would the Times do? Most of the tax credit bill is paid to working parents, including full-timers on the minimum wage, to keep children above the breadline. Would the Times support a living wage, or should those families use food banks?
Defenders of social security fight back feebly with mere facts. Tell people that most of the poor work, tell them only 10% of the Department for Work and Pensions bill goes on those out of work, or tell them the dole in the UK is almost the lowest among the richer EU nations. But if the facts don't the fit people's belief, they are soon forgotten.
Better to tell true stories about the cuts, like that of Martine White, a thalidomide victim who's blind in one eye, partially deaf, uses a stairlift and a wheelchair and is waiting for spinal surgery. She worked until 2004, when she had a brain tumour removed. But she's losing £110 a week and has been told to attend a work training course. That's no one-off error when official figures show more than 1,700 disabled people died last year within weeks of being found "fit for work".
The government put up a ferocious fightback this week, rightly sensing that cuts for the frail and party-time for the mega-rich risk shocking even natural conservatives. This is just the start. From now on there will be hundreds of thousands more Martine White stories – while Philpotts are rare.
Guardian
