Torbay MP Adrian Sanders has given his initial reaction to today's budget announcement by Chancellor Alistair Darling: "This is a pick and mix budget, when we needed tough long term decisions. It presents some difficult challenges for Torbay and South Devon."
• No help for people struggling to make ends meet. The Government has tinkered with tax credits, when it should have offered a permanent big tax cut, paid for by closing tax loopholes and cracking down on tax avoidance. By raising personal allowance to £10,000, vast majority of people would have their income tax cut by £700 and 4 million of the lowest paid will be taken out of tax altogether.
• 50% top tax makes clamping down on tax avoidance even more essential. The Government claims that by raising the top rate of tax to 50% for people earning over £150,000 it will raise £1.1bn. The IFS however says it will raise far less than this as people will simply avoid it, for example by presenting their income as capital and therefore only have to pay 18% of CGT. CGT should be taxed as income and other loopholes closed.
• Continuing the wasteful VAT cut. The Government will waste an extra £8.5bn on the VAT cut, it should have been reversed and the money put into creating jobs for today and assets for the future, through projects such as building social housing, insulating homes, schools and hospitals and re-opening and upgrading railway lines.
• We have been saddled with decades of debt because of no long term tough choices. The Government budget deficits over the next 5 years are going to cost £32,000 per household. The government has not made the long term tough choices which will return our economy back to stability in the future.
• Ludicrously optimistic on cost of banking rescue. The Government has claimed that the bank bailout will cost just £49bn, when the IMF claims it will cost more than double that at £130bn. They have also failed to get banks to lend to solvent business and there is still not strategy to sort the banks out, break them up and re-privatise them in the longer term.
There were four areas of the budget that will directly impact on our local economy:
• The gaming machine tax increases will hurt amusement parks, arcades and others who derive an income from small stake machines.
• The £8 to £48 per tonne rise in the landfill tax will hit Torbay hard. The low priority Torbay has given to recycling in recent years needs to be reconsidered and radical policy changes implemented.
• Guest houses and small hotels trading just below the VAT registration rate of £67,000 will need to be alert to the fact that a turnover rise of just £1,000 will lift them over the threshold for VAT.
• Pub closures locally are unlikely to be stemmed with the beer and other alcohol tax rises. Local landlords wanted a beer tax cut to give local pubs a chance against supermarkets subsidising prices below the wholesale prices pubs have to pay.
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