Tax cuts for the rich, taxes and cuts for the poor

By Virginia Moffatt
March 16, 2016

A regular  theme of George Osborne's Chancellorship has been to reduce taxes for the rich while cutting the wages and services of everyone else, particularly those who are poorer.

This budget is no exception. Capital Gains Tax (the charge made on the annual profit of sales of assets) is reduced from 28 per cent to 20 per cent, a nice "shot in the arm for the stock market, with investors in stocks and shares being the main winners", according to David Kilshaw of the accountancy firm EY.  In addition, Corporation Tax (the annual tax on company profits)will be reduced from 20 per cent to 17 per cent by 2020.  As Richard Murphy of Tax Justice Network tweeted "17 per cent corporation tax and ultra low capital gains tax rates? The UK's tax avoidance advisers must be rubbing their hands in glee."  Meanwhile, young people will be able to start life- long ISAs, thanks to a subsidy from the government. Of course, they will need savings to begin with, but this will be no problem for well off families, who will also benefit from an increase in the top rate of tax to £45,000 a year.

While the tax avoiders and richer families are celebrating, there won't be much rejoicing for those who are poorer. Raising the tax threshold to £11,500 won't help the poorest people on benefits  whose annual income is way below this.  Nor will it help part time workers on minimum wage who earn too little to pay tax.  And the plan to implement  £3.5 billion cuts  by 2020 will hit sick and disabled people again, as over a third of this is touted to come from the budget for Personal Independent Payments. Additionally, the much touted 'sugar tax', is likely to affect low income families disproportionately. 

All of this is bad enough, but there's one tax cut that shows exactly where George Osborne's priorities lie.  Homeowners  with spare bedrooms are being encouraged to rent them out to AirBnB with a tax break worth £1,000/year.  Yet thanks to the 'bedroom tax', social tenants with spare bedrooms continue to be penalised financially - there really is one rule for the rich and one for the poor

When is a spare bedroom not a spare bedroom? When it can be turned into a profit.

You can access all Ekklesia's commentary and analysis on the 2016 Budget here: http://www.ekklesia.co.uk/budget2016

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©Virginia Moffatt is Chief Operating Officer of Ekklesia.

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