Hammered with Tax

For many years now government budgets have been intensely party political affairs - while claiming to be about fair taxes and the nation's finances.

My favourite budget of recent time - though not for 'good' reason was the one in which Gordon Brown claimed that getting rid of the 10p tax rate was of no great consequence - that it would have no real impact on people in lower paid jobs.

So ever since I have taken all the competing claims and counter claims at budget time - with a great big pinch of salt.

'Pensioners Hammered With Tax' - screams one newspaper headline - only to reveal that what we are talking about is that the average member of the retired community - will be £83 a year worse off as a result of age-related retirement benefits being abolished.

Yet the standard weekly pension went up by £4.50 last year - while many people in work received no pay  increase - and it is due to rise again this year by £5.30 a week.

So I can't get too worked up about the great 'granny tax' robbery - because it's all overblown and hyped up to the point of ridiculousness.

The taxman or Her Majesty's Revenue and Customs (HMRC) - to use their full title - tells us that the 2012 budget was neutral overall which is none too surprising - given the economic mess the country is in.

Everyone it seems has a very narrow point to make on behalf of the particular group they represent - but by and large that's all about vested interests trying to hold on to what they have already. 

What puzzles me is that while some people bang on about the need for fairer taxes - they are still defending 'final salary' pension schemes in the public sector - which involve a huge subsidy from the less-well-off to the much-better-off.

How can that be fair?

Yet Labour and the unions are both still fighting to keep such pension arrangements in place - instead of supporting a much fairer 'career average' pensions which mean that people get out roughly what they put in over their working careers.

Another headline grabbing measure in the budget was the cut in the top rate of tax from 50p to 45p from 2013 - having been increased only a few years ago from 40p to 50p - in response to the economic crisis.

The government claims that new measures - a much higher tax on expensive property sales and a tougher tax avoidance regime - will be more effective and will bring in five times as much money to Treasury coffers as a 'punitive' 50p tax rate.

Now  the claim was immediately 'monstered' by Labour which countered that this was a budget for millionaires - but Ed Miliband and Ed Balls are the same people who went along with Gordon Brown - in getting rid of the 10p tax rate.

So what do they know?

The budget does at least deserve three cheers for increasing personal tax allowances to £9,205 a year - which will rise to £10,000 a year by 2014.

The move will help everyone in work and will take more people out of tax altogether - which is good news for the low paid and people in part-time jobs.

The biggest shock for me though was on the cost of smoking these days - not so much that the price of 20 cigarettes was being increased by 37p - but that this would take the price of a packet of fags to an eye-watering £7.50 - apparently.

Which is of course £52.50 a week for someone with a 20 a day habit.

Now speaking as an ex-smoker myself - I would definitely agree that this does amount to being hammered with tax - but what an incentive to give up!

Especially with all the support there is these days - for smokers to chuck the evil weed.