Investors see through Brown’s blather
Posted on March 21, 2007 by Richard Beddard
Filed Under Ramblings |
So the Chancellor stole David Cameron’s thunder with headline grabbing cuts in income and corporation tax. Judging by the spike in the FTSE during the speech, as soon as traders heard the words ‘tax’ and ‘cut’ they shouted ‘buy’.
As the dust settles, the real world, where the bad news is buried in the detail, is reasserting itself. Although the basic rate of income tax is coming down from 22p to 20p in April 2008, the chancellor is abolishing the 10p lower rate too [Update: Nick Robinson explains the maths]. Many of the goodies are deferred to 2008, 2009, or even 2010. While the accountants scurry away to work out whether we win or lose, investors are already sending in their reactions, and they’re not happy:
Bryan McGrath, a semi-retired computer programmer and a one-man limited company, is critical of the chancellor’s hike in smaller company corporation tax from 19p to 22p by 2009:
In the past, it used to be entrepreneurs were the lifeblood of the country. Basically, he’s jettisoned all that. I think one of the reasons he’s cut the main corporation tax rate is because he’s scared companies are going to go offshore, so he’s hit a softer target [small businesses].
Bryan’s also sceptical of the chancellor’s plan to privatise the student loan book, raising £6bn:
Longer-term I wonder what an investor would get back. At the moment student debt increases by an inflation figure and then when the student earns £17,000 or thereabouts they have to pay it back. As a trader I’m not sure I’d want it. If I were someone like Goldman Sachs I’d wonder how I could make a turn on that. I wonder if it’s something capable of being implemented.
Angela Frith agrees:
The government is just dipping its toe into the idea of green taxes, presumably to see how they will be received, and how much cynical revenue raising it can get away with. Gordon Brown was announcing to big business that tax concessions will be made to keep the UK competitive as a location, and stuff our home grown small entrepreneurs - they can pay for it.
As for cars - for fifty years the whole thrust of government policy has been towards private car ownership. Now here we are at the dawn of the 21st century, with our public transport systems dismantled, privatised and bankrupted. Our landscape networked with motorways. Our homes absolutely seperated from our workplaces by post-war planning policy.
Now our government intends to start taxing us out of our cars because they are environmentally damaging - but what are our alternatives?
Basically, if you are a small business person, running a large estate car for carrying your product, with a partner in a part-time job - Gordon Brown does not like you.
Steve Oakley, a former RAF logistics specialist now working in Dhahran, Saudi Arabia said it was a “smoke and mirrors” Budget:
I gave him four of ten last time. I give him 3 out of ten this time. He’s trying to stay in control and he’s trying to lock his successor in. The 20p income tax band is twelve months away so this is a budget for 2008.
On tax relief for pensioners, Steve says the whole policy of credits is wrong-headed:
The way he’s trying to help pensioners is intensely bureaucratic. Many people of my mothers’ generation will do without the money. Many of them simply can’t sort it out, or don’t understand what they are getting. As has been proved year after year this kind of help simply doesn’t reach the people who need it. My mother lives alone on a state pension and my father’s mineworkers’ pension. Fortunately she’s got a bit of a cash and I help her with her investments. But if she was an ordinary person on a state pension. God knows how she’d live.
The one thing I do applaud is the extra £6bn to people who have lost their pensions [through company insolvency]. But… he abolished relief on advanced corporation tax, and that’s taken £100bn out of the pockets of pensioners over ten years. It’s lead to the breakdown of final salary schemes and poverty for pensioners on fixed incomes who’ve watched council tax and mortgages go up.
There’s smoke and mirrors with inheritance tax thresholds too:
The IHT threshold is rising but by far below the inflation rate for housing. Houses are going up at the rate of £120 a day and he’s not going to raise the threshold to £350K until 2010. In three years time the IHT allowance will be just as inconsequential as it is now.
And the government simply doesn’t get climate change:
If we are concerned about global warming we should be seriously tackling the true causes of global carbon dioxide creation, which are gas-fired power stations, oil powered fires stations, and shipping. The container ship that sails from the Far East to Western Europe uses 2,000 tonnes of fuel. It’s carrying water from Fiji. It’s carrying plastic things to put in Cornflakes packets. Do we really need them?
Liz Reason, a climate change consultant and director of the AECB, the sustainable building association, who lives in a house once ranked third in the top ten energy efficient homes in the country (it’s relevant, trust me) agrees:
It’s only for pensioners. What we need is a 20-year programme of refurbishment of existing homes to high energy efficiency standers. The first thing Angela Merkel did when she came in as German chancellor was announce a systematic programme of refurbishment. Will the pensioners even apply for the grants?
The real problem with energy efficiency is inertia, she says, and the Government should take a lead.
Exempting new zero-carbon homes from stamp duty is unworkable she says, because she doesn’t think there are any:
Nobody really knows how to build a zero carbon home yet and there is no programme of measurement, so how will we know that a home is eligible for this rebate?
No builder has ever been prosecuted for failing to meet building regulations on energy efficiency, she says, so she expects the Treasury just to accept people’s word that their homes are efficient.
It’s always the case with Gordon Brown. He hasn’t got climate change in his heart. He’s terrified of anything that would upset voters. Sometime somebody’s got to bite the bullet, and it’s not going to be Gordon Brown.
The Devil’s in the detail, they say. Have you spotted him?
Comments
16 Responses to “Investors see through Brown’s blather”
Leave a Reply
The budget is spin as normal. The 2p cut in income tax is more than offset by the NIC realignment and abolition of the 10p rate. He knows that few people will claim the extra allowances and small businesses will have another hurdle to jump in order to grow. No wonder the MPs got a 10% pay rise. That is what this budget will cost us mere mortals.
Great blog thanks.
I agree with Liz Reason…
Gordon GB Brown just ain’t ‘got’ the low carbon thing yet! Sorry but it’s a crying shame. His engine of growth is still fossil fuelled. He may mean well, but if he doesn’t wake up and smell the CO2 soon we will all be roasted. (And we will have missed the oppty for GB to lead the 2nd industrial (post carbon) revolution and prosper…
The opportunities for UK has to lead the world in the low carbon economy are being missed because he sees them as threats and is playing with green tax games instead of tackling the biggest issue humanity will ever face…
Ironic that the budget speech came the same day as Al Gore told Congress we enter a time of PLANETRAY EMERGENCY (and I agree with Al)
Would the real leader of the Uk stand up please - who is going to be up for the job?
Dave
Taxing the population life style is one thing.
But is Gordon GB Brown going to tax the sun everytime it goes into a high solar flare activity phase. Such as it is doing now and heating the worlds oceans which is actually producing more Co2 than the worlds population.
Wake up and start sniffing the overt taxation on your own expelled breath because next Gordon will be taxing that too if he could find the excuse to do so.
How long are we going to be beaten over the head with green taxes. It seems to me that the yet to be proved human contribution to carbon emmissions being little more than a drop a very large ocean, is merely an excuse to steal more of my hard earned money. My state pension goes up in April by the magnificent amount of £4.20 per week. That has already gone as of yesterday with the increase duty on fuel, and the council tax demand demand which dropped on my doorstep whilst Brown was telling me how well he had done.. Not content with that scrapping of the lowest tax rate is taking more from me since I do not stray into the standard rate. My income stays the same, I haven’t a captive client base to charge the extra,…. this is my real world.
Has a new business owner, Having to borrow money to create jobs. GB has just about killed me off. I put everything at risk to better myself, because he says stablility, Stability, Stability. Then he destables my business. Costs increase across the board in one fell swoop. Whats the point when you own government is hell bent on taking away everything you work for. You should be ashamed of yourself GB. More Tax, More NI, More tax on a small profit. What is next????
As a small business man all my life I am glad I am too old to worry. The man has not got a clue how business operates and continues to agree to more red tape and hidden taxes. These hidden taxes cost as much again for us to comply with the paperwork as the money involved. We are fast heading back to the Harold Wilson days and the decline of the wealth creators.
There is no “green” agenda, its all about tax raising. I wonder how long it will be before people wake up to this.
Someone, presumably without any relevant credentials, says “But is Gordon GB Brown going to tax the sun everytime it goes into a high solar flare activity phase. Such as it is doing now and heating the worlds oceans which is actually producing more Co2 than the worlds population.”
The Sun is not in a high solar flare phase. Solar flares add insignificant amounts of energy to the average flux. The Solar flux has been remarkaby stable for quite some time.
Keith Dancey
UARS (NASA) ERS1, ERS2, ENVISAT and MARS EXPRESS (ESA)
Another writer, also apparently without credentials, says “How long are we going to be beaten over the head with green taxes. It seems to me that the yet to be proved human contribution to carbon emmissions being little more than a drop a very large ocean, is merely an excuse to steal more of my hard earned money.”
The amount of CO2 in the Earth’s atmosphere has increased by more than 35% within the last 100 years.
We know this increase comes from fossil carbon because the isotope ratio differs from the carbon held in the biopshere (within the carbon cycle). This atmospheric fossil carbon does not appear in the ice-core record until about 100 years ago.
There is only one way such fossil carbon can get into the atmosphere, and that is by combustion of carbon previously locked in the Earth’s crust (ie coal and oil).
Keith Dancey
UARS (NASA) - which measured atmospheric CO2
ERS1, ERS2 and ENVISAT (ESA) - which measures global sea-surface temperatures.
MARS EXPRESS (ESA)
OK, so let’s accept the fact that this was a totally self-serving individually promoting budget designed to make the stupid public believe that Gordon Brown is the best thing to put into No10 - so where does that leave us?
We can do absolutely nothing about it until the next General Election and do we seriously believe that David Cameron has either the experience, ability or political will to make the radical changes necessary to reduce our overall tax bills?
I think not.
I think that the fact that these young guys want to be politicians is reason enough to ban them from ever being one. We need older, more experienced people governing us. People who have experience of life and business and to whom the £200,000 annual salary and expenses is not the reason they go into it.
Me . . . I’m going to sell my business and bugger off to live in France!
The real budget killer has had very little publicity yet, but for me it could even bring on recession:
From 2008, empty industrial buildings and factories will have to pay rates. That’s a massive whammy for owners and even tenants of such buildings. The likely consequence: a rush to dispose of property, bringing asset values down (and everything that goes with that) and a serious threat to speculative development, which could also impact on the construction industry.
The benefit to the economy? Can’t immediately think of any.
Council Tax takes most of the State Pension
increase the cost of living takes the rest.
The increase in State Pension over the last ten years has not been in line with living costs
and Brown must know this fact.
I had a small business and also worked as a contractor in the investment banking sector. More and more red tape and compliance issues forced me to get out and move overseas.
Taxation was terrible and for the employed it was even worse. With the ceiling on NI lifted people’s marginal rate of tax was 51% (40+11). That is immoral.
I now live in Thailand and have small business interests, far less income, loads of 3rd world hassles but I know that I get most of what I earn, I am my own boss and I hope never to see the UK again.
Immigration has killed the UK off.
The consensus then, is:
Gordon Brown is in no way committed to the (green) issues that matter to thinking people. He is a seeker of power, not a leader of his people.
He regards the entrepreneurial class, the backbone of the British economy, as a milch cow that can be easily taxed to support more headline attracting sectors. He is willing to risk it’s decimation.
Despite large increases in the level of taxation, we are unable to observe any significant improvements in public services. In fact, the most vital service, the NHS, continues to deteriorate.
Will the Labour Party accept him as an election winning leader? If it does it will have lost its way as badly as the Conservatives in recent years.
The point Steve Oakley, from Dhahran, misses or ignores in his critism of container shipping is that it is the most cost and ‘green’ efficient method of transport of freight around the globe. The laws of supply and demand will always ensure we need products from around the world, be it tea from India, lamb from New Zealand, spices from the Far East, or his little plastic wotsits for the cornflakes from wherever - and shipping is the cheapest and greenest way of getting it. When container ships began, one container ship replaced six conventional ships - I know, I was there. Yes, the ships burn a lot of fuel, but compare that with the fuel used, cost and CO2 produced /tonne of freight moved and then show us a better figure from another way of moving it. Don’t knock shipping - the UK was built on it, when we still had a merchant navy.
[…] Investors see through Brown’s blather […]