Tuesday, 28 April, 2009
 | The Budget |
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The real shock of the budget was not the proposals to increase taxes. After running out of stealth taxes it is hardly a surprise that direct tax rates should rise. The surprise was the level of debt forecast which are almost certainly too low. The worst manufacturing figures since the war showed the economy to be in as even worse state than the Government expects so debt will rise further.
It is worth remembering that debt is merely taxation delayed – it has to be pad for eventually plus interest. This is why David Cameron is right to predict an era of austerity. We cannot continue to live off the earnings of future generations. The country will need to start living within its means which requires reductions in public spending. It cannot be prudent for Government expenditure to account for half the economy.
As has been typical of the Government its costs will fall especially hard on Somerset. It has pushed more taxes onto those things that people who do not live in cities cannot avoid. The increase in fuel duty, which comes into effect in September and will then keep rising, will hurt rural families and businesses far more than urban areas.
Pubs, which have been struggling as the Government ignores their pleas for assistance, will be hit again as alcohol duty – which rose in December – will continue to increase above inflation on beer, cider, spirits and wine. This will punish responsible landlords operating in a harsh business environment and it will do nothing to reduce problem drinking.
Alastair Darling has also announced an increase for National Insurance. This is a tax on jobs that discourages local firms from hiring more staff, whilst potentially forcing them to reduce costs by cutting wages or jobs. This tax will mean that anyone on over £20,000 a year will lose out. In B&NES the average annual wage is just over £26,000 (source Nomis) meaning most local people will be worse off thanks to this budget.
Labour has neglected our area for over a decade and now it is taking more money from us yet again. We will all have to tighten our belts but it is wrong that Somerset is once more hit so hard.
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