Thursday, March 29, 2007

Budget Hits Local Families

Budget hits local families.

Gordon Henderson has delivered his verdict on Gordon Brown’s Budget which sets out the Government’s plans for taxes and public spending:
· Independent experts have calculated that 3.5 million families will be worse off as a result of the Budget. The headline-grabbing move to cut the basic rate by 2 pence is offset by the abolition of the 10p income tax rate and an increase in National Insurance contributions for many.
· A single person without children earning £16,000, like an NHS maternity care assistant or a police community support officer, will pay more in tax, and not gain from tax credits.
· The Government is considering introducing a raft of new town hall taxes, including bin taxes to collect household rubbish, higher council tax bands, regular council tax revaluations and pressuring pensioners to sign away their homes in return for deferring their council tax bills – a ‘death tax’ in all but name.
· The Budget has hit small businesses. Gordon Brown is raising the tax rate and increasing complex allowances for small firms.
· The NHS was mentioned just once in Gordon Brown’s speech and there was nothing proposed to tackle the £1.3 billion financial crisis in the NHS, with nurses being sacked and operations delayed.
· The Budget fails to increase stamp duty thresholds in line with house price inflation, increasing stamp duty by stealth. The average first time buyer is paying over £1,500 in stamp duty, and more and more homes are being pushed into the punishing 3 per cent band (£7,500 tax on a £250,000 home).


Gordon Henderson said:
“Gordon Brown’s last Budget is a tax con not a tax cut. He gave with one hand and took back with another. Three and a half million families will be worse off.

“In his stealthiest taxes yet, he has paid for his 2p cut in income tax by abolishing the 10p rate, hitting low income earners like junior nurses, and putting National Insurance up for professionals like doctors. There is nothing to tackle the crisis in the NHS.

“Worse, Gordon Brown’s town hall tax report has dropped a tax bombshell on working families and pensioners across Swale – calling for regular council tax revaluation, higher bands, a new bin tax and a new death tax on the elderly. Higher taxes are on the way - engineered by Labour Ministers in Whitehall - without any improvements in local services.”

Notes to Editors

The Budget was announced and published on 21 March.


Independent experts the IFS have calculated that 3.5 million families will be worse off as a result of the Budget.

From April 2008, the 10 pence income tax starting rate will be removed for earned income and National Insurance Contributions will increase as the upper limit for paying the 11 per cent rate will rise by £75 per week to £745 or £38,740 per year.

From April 2009, National Insurance Contributions will increase again as the upper limit for paying the 11 per cent rate will rise to the same level as the top rate income tax threshold. The overall impact of income tax/NIC changes will cost working families over £300 million a year.


Gordon Brown has raised overall taxes on businesses by £1 billion.

Small businesses will be hit the hardest, with a higher rate of corporation tax and more complex reliefs and allowances. As Nick Goulding, Chairman of the Forum of Private Business remarked: “the Chancellor has used smoke and mirrors to disguise the fact that there is nothing in this Budget to support small businesses.”


Gordon Brown’s report on town hall finances, was also published at the same time as the Budget.

· New home improvement tax: On top of new council tax bands, the report recommends not just a council tax revaluation, but regular revaluations (p.240). The council tax revaluation will mean Gordon Brown’s inspectors, the Valuation Office Agency, will inspect, photograph and catalogue every home, and every sign of a nice neighbourhood. Council tax bills will rise purely for living in a quiet road, being near to a bus stop, or having a parking space. People who rent will be taxed just as much as those who own their home. Inspectors have the right to enter people’s homes, on pain of £500 fines. Unlike at present, council tax will effectively become a home improvement tax.

· New death taxes: Pensioners face the prospect of being pressured to sign away their homes’ equity to local government tax collectors (p.259). Town halls will encourage pensioners to ‘defer’ their local tax bills, and instead pay - with interest - when they their property is sold or on death of the surviving resident spouse. Such a policy though will pressure many pensioners on fixed incomes to sign away their equity if they are struggling with their tax bills. A typical pensioner in England will face a net debt of £64,000 after 20 years.

· New bin taxes: Town halls will charge new bin taxes to collect household rubbish (p.280). Microchips will be installed on compulsory wheelie bin and new municipal bin inspectors will police every bin. The taxes will damage the environment and public health by causing a surge in fly-tipping and backyard burning. Based on Ireland, the charges will be £451 per year to collect 2 bin bags a week.


The NHS is in severe financial crisis. Across the country, the NHS is forecasting deficits this year amounting to over £1.3 billion – an even worse position than last year, and the worst in its history (Department of Health, NHS financial performance quarter 3, 20 February 2007).

Almost 20,000 jobs are set to be lost from the NHS this year (Patricia Hewitt, Letter to Andrew Lansley, 25 January 2007). In the last three months of 2006, the NHS was shedding jobs at a rate of over 100 a day (Office of National Statistics, Quarter 4 public sector employment, 14 March 2007).


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