The Budget, Democracy, And Britain Today Mar 13 2008
So yesterday was the budget in the UK, the day where the government outlined the nations finances, and proposed economic reforms. The Chancellor managed to put a positive spin on many of the economic forecast figures (especially given the global economic backdrop), however it was obvious that the majority of these figures seem to be fairly optimistic, and it doesn’t help that a number of the figures were massaged to suit their needs - conveniently leaving out the nationalisation of Northern Rock for example, which has adversely affected the economic outlook for the country. Had it been included in the figures on the nations debt, then the government would have been outside of their targets - of course, even with it excluded, they are barely making their targets, and barely meeting their ‘golden fiscal rules’.
I’m not going to go through all of the budget, as there are a lot of different aspects to it - however here is a brief run down of the bits that seem to be the main talking points today, and which are probably the most salient points for most Britons:
- Delayed rise in fuel duty - a 2p increase was due to come in in April, but that has now been delayed until October
- Incentives for those buying new greener cars, but potentially increased taxes when buying new cars that are deemed bad for the climate
- Funding set aside for 'researching’ road pricing (i.e. congestion charges, and toll roads)
- Alcohol duty raised - beer up 4p a pint, wine up 14p a bottle, and spirits up a massive 55p a bottle
The delay in the fuel duty sounds like good news - until you realise that fuel prices as a whole have increased by around a fifth in the last two years anyway, and while the biggest reason for that increase is the rise in crude oil prices, the tax that the government currently apply is a percentage - so when the price of fuel goes up, the actual amount of tax they take increases. Crude oil prices have gone up as a result over supply issues, and fears over conflicts in the Middle East - and so the increases are far above inflation. This means that you are paying more for your fuel now than you were a year ago, even in relative terms. A delay until October will still not allow the fuel prices to settle in line with inflation, and will still leave all of us out of pocket every time we fill up our cars.
Talking about cars - those buying new cars will be affected by a new 'showroom tax’. The idea? Taxing those who decide to purchase cars that are bad for the climate. However in reality, it appears that the definitions may include many cars that are commonly used by Britons today (such as the Ford Mondeo, and the Citroen Picasso). This means it isn’t singling out just the worst polluters. From April 2010, the highest polluting cars will result in £950 in vehicle excise duty in the first year. It’ll then be £455 per year thereafter. The next emissions band down will draw £750 in the first year, with £430 a year from then on. For current cars, from April 2009, the emissions bands will also change, and it’ll result in increased charges for many drivers. Of course, those driving green cars supposedly should end up paying less - but seeing as how these changes are forecast to generate £465m in 2009-10, and £735m in 2010-11, it’s obvious that this is another money spinner. It would make sense to me to concentrate on providing incentives to allow many drivers of much much older cars (of which there are still lots on Britain’s roads) to upgrade to new cars, which are surely better on emissions in many cases.
The fund set aside for research into 'road pricing’ seems like an awful lot of money to spend, given the state of the economy, and the tightening of the purse strings in other areas. No word yet on whether this 'road pricing’ would replace the road tax that all drivers are paying today anyway - however my guess would be that in the end, drivers will end up paying both the road tax, and 'pay as you go’ road pricing charges, as it’d just be another source of revenue for the government.
On alcohol, Labour chose not to adopt the ludicrous proposals put forward by the Tories a week or two ago (massive increases on high alcohol level drinks and alco-pops), however they did decide to apply some fairly hefty, above inflation tax increases to alcohol across the board. The Tory proposals were designed at curbing binge drinking amongst Britain’s youth, and there’s probably a similar sentiment behind the Labour proposals - however they are all missing the point in a fairly fundamental way. It seems as though everyone is being hit with the increased taxes, to cover the supposed increased costs that the National Health Service and the Police are facing when dealing with binge drinking on the streets. It actually makes more sense to simply bill those responsible for those increased costs. It surely doesn’t get any simpler than while handing a yob his court summons for drunk and disorderly conduct after releasing him from an overnight spell in the klink, the Police also hand him a bill for the jail cell for the night, and for their time. Likewise, when a drunken youth is discharged from hospital after having their stomach pumped because of the excess alcohol they irresponsibly consumed, they should have to pay their own medical bill. It seems to have gotten to a level within this country now where personal responsibility is a thing of the past, and so we all pay the price, in most cases, literally. While the above measures of course are simplified somewhat, the basic idea that people could be responsible for their own actions is something that is ignored in todays taxation system. And the main reason we are unlikely to see such a change, is that the increases in alcohol taxation that effect everyone will drag in more revenue for the government than they actually need to cover the increased costs posed by binge drinking, whereas if they only charged those responsible for the costs, they wouldn’t end up making any extra money on it. Potentially then, this is yet another stealth tax in many respects, designed to generate revenue to cover shortfalls in other areas (or to pay for expensive research into 'road pricing’).
Anyone that’s followed this thus far has probably gathered that my general feelings on the budget today aren’t positive. There seems to be a certain amount of sticking heads in sand, and ignoring the economic slowdown that’s affecting the country - instead putting a positive spin on massaged figures. There also seems to be a growing trend towards taxation ahead of personal responsibility. I think that the main problem facing this country at the minute though, is one of democracy.
Aside from the budget, and the economy; one thing that is forgotten is that the current Prime Minister, and the Cabinet he has put in place, have no public mandate to rule the country. While there are undoubtedly Labour supporters who are behind the current government, no-one in this country has been given the opportunity at the ballot box to decide whether the current Prime Minister, Gordon Brown, is right for the country. This is supposedly a democratic nation, and yet the leader of the country wasn’t put in place by any general election. His party was voted in (narrowly) almost three years ago, but he wasn’t the leader then, and if he had any stones at all, he would call a general election, and see if him and his party still have a mandate from the people of this country to make decisions, or whether it’s time that the country wants someone else in place. Of course, almost all of the newspaper and TV polls suggest that the country DOES want someone else in place, and as long as the public opinion suggests change, the current government will wait as long as possible before asking the nation to vote. They are making decisions here with no say from the 60m inhabitants of the country - that doesn’t sound like democracy to me. Here’s hoping that Britain becomes a democracy again sometime soon.
britain • budget • democracy • economics • finances • labour • liberals • politics • tories