Monday, October 13, 2008

Silver And Gold

Obviously as a new homeowner I'm awaiting the budget with a degree of trepidation. But I'm curious about what they'll do.

People like me are the lifeblood of the economy. I'm young, middle-class and on a decent salary. I contribute more or less a third of my salary to the state and take very little from the system in return. This is the social contract that I'm obliged to accept for the greater good and which most people accept unthinkingly.

Furthermore I'm a consumer so my spending contributes even more to the overall tax take, while keeping others in employment (who must also also pay tax and spend money and so on and so on).

So what will happen if my direct taxes are hiked? Well, simply, I'll adjust my spending downwards accordingly. What the government might get off me in extra income tax they will lose in VAT. Also, if many people react the way I will, businesses will struggle, thus denying the state taxes on their profits. If these businesses cut jobs or close altogether there will be fewer people paying income tax and more seeking welfare.

All that seems fairly obvious, I would have thought, so is there any chance that the budget will be a little more innovative than that?

Personally I'd much rather see an emphasis on closing tax loopholes so that those who can afford tax avoision (it's a word!) are prevented from doing so. Then I'd like to see evidence that the money they do have is going to be spent efficiently. I hate seeing it wasted - it was mine after all.
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