This was a disappointing Budget from a weak Government which failed to show leadership and make cuts where needed to reduce its debt.
orrowing, instead of reducing, is set to be similar next year to this year. Cuts are being saved until after the election.
Here we have the key – it is a Budget to win votes. Keep spending where it is but squeeze the top 2 per cent by raising 50 per cent of revenue from them.
Although for pensions, those earning under £130,000 are not included in the loss of full pension tax relief, the £130,000 limit includes an individual’s own pension contributions plus charitable donations so those who think they are exclu- ded may not be.
This issue of reducing tax relief for high earners annoyed me in the Budget announcements in April. Relief means reduction of tax already paid, not money taken from other sources. The fact that 25 per cent of pension relief went to the top 1.5 per cent of earners is an indication of the high percentage of tax that these people pay.
Pension contributions are invested and help the wider economy. Yet tears were unlikely to be shed nor many protestations made over this announcement so it is an easy tax win.
On a more positive note and with Copenhagen clearly in mind, the Chancellor made pleasing announcements about supporting low carbon growth.
Tangible cash encouragements to insulate your loft and scrap your old energy inefficient boiler were welcome, as was the tax-free cashback scheme for income received by those who generate renewable electricity for their homes.
Communities who have made a go of these initiatives and have made them successful will be pleased at this recognition and it would be good to think that this will encourage others.
Those choosing an electric car found savings of company car tax from 2010 and there were budgets set aside to assist with energy efficiency and low carbon industries.
While IHT relief has remained static, so has capital gains tax. This obvious anomaly may well be addressed in future Budgets as 18 per cent capital gains tax becomes more attractive, with the 50 per cent top rate income tax round the corner.