The Budget 2011

[sivispacem]

For all you Brits, it's budget day. Been listening to it live on the radio, a few very interesting areas (for me, anyway) have cropped up.

 

1) They seem to be (finally) combining income tax and national insurance. Why this hasn't been done previously, I have no idea, as to me it's utterly illogical to have two forms of tax, calculated and administrated in totally different ways, on the same form of income. Of course, it will only apply to those in work and income from other sources won't suddently be subject to national insurance too.

 

2) Tax cuts for small and start-up type businesses, primarily from a planned (and siginficant) reduction in corperation tax. With all the talk of businesses being pushed out of the UK (or discouraged from coming entirely) by the high costs of operating in the UK, this seems pretty logical as a way of encouraging growth. The cut is counterbalanced in the financial services industry by an increase in the bank levy on operating profits.

 

3) The increase in costs to non-domiciles who are living in the UK but do not pay tax in it- the existing system means that those with non-dom status pay £30,000 after 7 years, the new proposal increases that to £50,000 after 12.

 

Oh, and I can't exactly complain about 1p off the price of petrol and the scrapping of April's 5p/l price increase.

Edited March 23, 2011 by sivispacem

[Struff Bunstridge]

2) Tax cuts for small and start-up type businesses, primarily from a planned (and siginficant) reduction in corperation tax. With all the talk of businesses being pushed out of the UK (or discouraged from coming entirely) by the high costs of operating in the UK, this seems pretty logical as a way of encouraging growth. The cut is counterbalanced in the financial services industry by an increase in the bank levy on operating profits.

 

This is the most important part for me; this is desperately needed to stimulate growth and provide alternatives to large corporations - I'm mostly thinking of food and general supplies.

 

Where I live, there used to plenty of small independent businesses - grocers, Asian food courts, local charity shops etc - that have sadly had to close in favour of national super- and mini-market chains. It robs communities of an awful lot of identity, and I think a lot of people would happily pay a little more to allow these sorts of local enterprises to flourish.

[sivispacem]

This is the most important part for me; this is desperately needed to stimulate growth and provide alternatives to large corporations - I'm mostly thinking of food and general supplies.

 

Where I live, there used to plenty of small independent businesses - grocers, Asian food courts, local charity shops etc - that have sadly had to close in favour of national super- and mini-market chains. It robs communities of an awful lot of identity, and I think a lot of people would happily pay a little more to allow these sorts of local enterprises to flourish.

Agree wholeheartedly. Though not just limited to food and general supplies- there are a lot companies in various industries (including my own) where the current levels of corperation tax have limited the amount that they can plow into additional research, development, recruitment, facilities ect- so they just stagnate, unable to advance their product or service due to the prohibitive costs of doing so, and eventually go out of business when they become obsolete. It's recently happened to my first employer.

[Andrew]

The 1p cut in fuel duty won't actually be seen, as whole sale prices have continued to rise. However the holding off on the 5p fuel duty increase will help matters. One thing I don't understand is the fact that the rising cost of oil prices is usually passed straight on to the pump prices, even though the current batch of fuel in the pumps is using the previous price of oil?

 

 

Where I live, there used to plenty of small independent businesses - grocers, Asian food courts, local charity shops etc - that have sadly had to close in favour of national super- and mini-market chains. It robs communities of an awful lot of identity, and I think a lot of people would happily pay a little more to allow these sorts of local enterprises to flourish.

 

 

This is because the government and local councils have pretty much allowed the big super markets to build anywhere they want and take over more businesses. My local small shop seems to be doing alright, however the bigger one in a neighboring village got bought out by Sainsburys. Within a 10 mile radius of where I live, I think I have. 5 Asdas, 3 Sainsburys, 2 Tescos, 4 Morrisons; is there any wonder the smaller independents cannot survive which so many super markets being able to bulk buy and get the cheaper prices..

[sivispacem]

The 1p cut in fuel duty won't actually be seen, as whole sale prices have continued to rise. However the holding off on the 5p fuel duty increase will help matters. One thing I don't understand is the fact that the rising cost of oil prices is usually passed straight on to the pump prices, even though the current batch of fuel in the pumps is using the previous price of oil?

It's true and a very interesting question- though it works both ways. The problem is that, like the gas and electricity companies, the petrol retailers are only really interested in the bottom line- hence the rapid price hikes when the fuel cost jumps, yet them dragging their heels when the price falls.

[Andrew]

That sounds about right always quick to put the prices up, but not to bring them back down again. Another point that I forgot to mention is that the 1p duty cut is being funded by taxing the oil companies further, or something along the lines like that. The chancellor has said that he will be watching the oil companies so they don't put the prices up to balance the higher tax, but has said he is powerless to stop it.

 

Although gas and electric prices should drop since ofgem has completed it's investigation. We need an oil monitor to monitor to price of oil and fuel and ensure consumers are not paying over the odds for it.

 

Do you think a flexible fuel duty system would work? Where fuel duty can rise and fall in relation to the price of fuel?

[sivispacem]

Do you think a flexible fuel duty system would work? Where fuel duty can rise and fall in relation to the price of fuel?

There's no doubt that it would work technically, it may not even be that difficult to implament. The issue would lie with where the government set the benchmark price with which to adjust. £1.30 per litre? £1.00? It would also need to be accompanied by additional regulation or pressure on the producers and suppliers to be meaningful. The greatest issue lies with the fact that price at the pump before tax doesn't really equate very well to the price of crude- there aer many other factors such as production costs, transporation, export price and value of various currencies and, probably most importantly, the profit margains the organisations are seeking to achieve.

 

There's been so much vitriol directed at the banks, people seem to forget that the major energy company profit margains are just as bad (or good, if you look at it that way)- and their behaviour directly affects the average person far more than that of the financial institutions. Always the way though, one industry gets made the scapegoat whilst all the others carry on profiteering with impunity.