The Budget

Before we start speculating about what will be in the 2008 budget on Wednesday, the first to be delivered by Alistair Darling, I think some attention needs to be placed upon two tax changes that were announced in Gordon Brown's last budget in 2007 but will not come into force until 6 April 2008.

The first change is that the basic rate of Income Tax will be reduced from 22% to 20%, which seems good news; but then you have to realise that the reduced Income Tax rate of 10% will be scrapped. The net effect of these two changes will be to make many low income households worse off.


Don't worry too much about the low paid though, Gordon Brown and Alistair Darling won't. These people will receive much of the money they lose in Income Tax back through the benefits system. The result of this system is that the low paid are made to feel grateful to Gordon and Alistair for the money they get back in benefits and so are encouraged to keep voting Labour. The real losers in the coming budget will, as usual, be the middle classes. The middle class will be hit by "green taxes" and other stealth taxes as they have been by most of Gordon Brown's previous budgets. The question this year is has Alistair managed to hide the real effects of the budget as well as Gordon Brown used to? If he has then it will be a day or two before the true budget has been extracted from the spinned budget.