A Speculative Rant

Next week is budget week, in which George Osborne will take the budget red box to the House of Commons and declare the next years economic policy, and as usual the press are having a field day guessing what Osborne will announce, and what they all seem to think is that the 50p tax rate will be cut. At the moment any earnings over £150,000 have a tax of 50p for every pound. To the average person this has no effect on them, but the aim of the 50p tax rate is to say, you get such a high wage because of society so you can give more back to society. But if Osborne does cut the tax rate will it be a good or bad thing for Britain?

The good old Conservative, capitalist answer will be that cutting the rate will be great for Britain. They will argue that it will allow ‘higher earners’, or as I would call them ‘The Rich’, to have larger disposable incomes. Thus they will be able to spend more money, boosting the economy. They will say that we are in hard economic times, and that even ‘high earners’ feel this, so we must give them some sort of tax break. The Conservatives claim the 50p rate raises little money and thus must be destroyed.

The Conservatives are wrong. When the 50p tax rate was introduced in 2010 by Alistair Darling it was because Britain’s economic situation was dire. In 2012 Britain is still in a dire economic situation. The coalition cuts are hitting the poorest in society the hardest, and the 50p tax rate is the rich paying their share. The only reason the Tories want to cut the rate is because they, and their friends, are the ones it affects. The Coalition is happy to cut services to social groups they are not part of, but when it starts to affect the wealthy, they have been tucked away in a bomb shelter; unaffected by the state of the economy. But what the Coalition is really ignoring is the fact that taxation works. We currently have a huge amount of government debt that has to be paid. High taxation, hand in hand with government cuts and wiser spending, will pay off this debt. The coalition seems to think that massive government cuts will save the debt problem by itself. It won’t. The money raised by the 50p tax rate will help to pay off the debt and put Britain back on track. If Osborne does cut the tax rate, he will be ignoring the plight of Britain’s lower and middle classes.

Next week when the budget is announced, I will watch with baited breath to see if Osborne cuts the 50p tax rate. If he does it will show that the Coalition is an introverted government that only cares about the rich. But only time will tell if all this speculation comes true, so until next Wednesday this is just a political guessing game.