The Mad Hatter and the Hokey Cokey Budget
I recently wrote that Kwarteng was just “a stupid Tory whose understanding of economics is no better than that of a slug.” I need to apologise … to slugs! Even the most primitive slimy gastropod has a rudimentary brain. Kwarteng, on the other hand, seemingly does not. He has dragged us down the rabbit hole of ‘Kwasinomics’ into a blunderland of make-believe and a Hokey Cokey budget: ‘you take a tax rate out, you put a tax rate back, in, out, in, out, shake it all about…’ His stupidity would be funny if it wasn’t so damaging to the economy. Kwarteng reminds me of the Mad Hatter in Alice in Wonderland. And like Alice, it is no good complaining that you “don’t want to go among mad people” because when it comes to the government their answer will be, as Alice was told: “Oh, you can’t help that, we’re all mad here”.
In fairness to him, I can see what ‘Mad Hatter Kwarteng’ was trying to do. Like Alice, he gazes upon “the loveliest garden you ever saw” and wants to find a way in. But whereas Alice did so by drinking a potion that made her smaller, Kwarteng wants to get bigger. His garden is not made up of “bright flowers and cool fountains” but of a growing economy and more government revenues – but at the same time with lower taxes. How can you square this circle? The Mad Hatter, when asked what the answer to his riddle was, had the honesty to reply “I haven’t the slightest idea”, but our mad chancellor just bluffs and blusters. He doesn’t have a clue. But if, like Alice, you are thinking “It would be so nice if something made sense for a change” then sit back and let me explain what needs to be done to fix the economy.
As I’ve explained in previous articles, the only correct approach is to raise the personal allowance from the current £12,570 to £20,000 (at the very least), and this should apply to everyone. Not a cut in the basic 20% tax rate, as we are being promised, as this is actually a con – but then again, what else would you expect from the Conservatives? Why, you may ask, do I make this accusation? Because, as the independent and highly respected Institute for Fiscal Studies has pointed out, “for every £1 given to workers by cutting headline tax rates, £2 was being taken away through a freeze on the level at which people begin paying tax on their earnings”. So, far from being a tax-cutting budget which will boost and revitalise the economy, the Mad Hatter has delivered a tax-raising budget. In fact, overall, income taxes have actually gone up by £21 billion, and “the average household will be £1,450 per year worse off”. That’s what you get from the Conservative frauds – remember that at the next election!
As well as increasing the threshold for paying the basic rate of tax, the threshold for the 40% higher rate should also be raised, from the current £50,271 to £75,000. And yes, there should be an extra top rate of tax, not of 45% but of 50%, which should apply on earnings over £250,000 (as opposed to the 45% rate which once more kicks in at £150,000). These tax changes would have benefited everyone (well, apart from the top 0.5% who are earning over £270,000, but they can probably get by!), but would have principally helped those on lower wages and the so-called JAMs – the ‘Just About Managing’ – who, like the Red Queen explained, are always given “jam tomorrow and jam yesterday—but never jam today”. Raising the personal allowance to £20,000 would also have the added benefit that, by taking everyone on the minimum wage out of tax altogether, it would simplify the system and save money on administration. Instead, by not increasing the personal allowance, the Con men will drag an extra 1.4 million workers into the tax system!
Why do we have to pay VAT on a burger but not on a sandwich? Or on essentials like toothpaste and toilet paper but not on caviar? Or on crisps but not on tortilla chips? The VAT rules are idiotic and unfair and need changing. How? By having different rates of VAT depending on the cost of the item you are buying. So I propose the following rates: (i) no VAT on anything under £10; (ii) 10% VAT on items between £10-25; (iii) 20% (the current VAT rate) on items from £25-150; and (iv) 25% VAT on items over £150. This would benefit everyone who is just buying their daily essentials, but would mean that those buying luxury items over £150 would pay a little more to help balance the books. Essential services, like energy, would also be zero-rated.