Monday, 20 April 2009

Discordant note....

. Nick Clegg today announced proposals to raise the income tax personal allowance to £10,000. Looking at the costings it is all pretty uncontroversial though I have to say I object to extending National Insurance Contribution's to multiple jobs mainly because this is counterproductive. Low and middle income earner's the very group we are supposed to be targeting and 'putting money into the pockets' of are the group most likely to actually have multiple jobs to make ends meet.

So, realistically it strikes me that you are potentially taking them out of tax with one hand and putting them back in through expanding the scope of NIC's. Bearing in mind the government proposals to raise NIC's as well this does strike me as a discordant note in the proposals. Whether Clegg likes it or not it is hard not to see this as a tax on jobs.

Other than that the proposals are basically solid; the inclusion of benefits-in-kind in National Insurance contributions is fair enough to my mind. There will be complaints about the increase in taxation on domestic flights but it is in line with the 'Green Tax Switch' theme and the switch from per person to per plane is long overdue. Tackling tax avoidance is always welcome and there can hardly be any quibble with that either. Some of the proposals require more detail before a judgment can be made like how tax relief on pension contributions to the basic rate will be restricted.

All-in-all a solid package, not quite worthy of shouting from the rooftops though....

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