Pulling the Rug From Under Cameron

The budget was ‘boring’ – until the end of the speech, when suddenly it was a ‘trick’ or a ‘flourish’, depending largely on your political point of view. I am going to go for a flourish, myself. The 2p off income tax was an iconic moment in the sweep of modern British political history. Just when David Cameron thought he was about to transform Old Conservatism into New Labour with promises of improved public services, New Labour swivelled around to become the Old Conservatism.

What is a zero carbon house? Not many of us know just yet, but I suspect a lot of people will be wanting to find out, and there will be plenty of legal work in developing and explaining the rules. I had my first invitation to a conference on the issue this morning.

Tying relief on stamp duty to carbon reduction is a clever idea, though a zero carbon requirement may be somewhat daunting. A simple raising of the thresholds for inheritance tax and capital gains tax is more reasonable, if less headline-grabbing.

The reduction of corporation tax to 28p from 30p, to be financed from reform of capital relief allowances - in particular an end to relief on empty industrial buildings - looks good. It is generally better to pay a lower rate on a basic tax than to claw money back through allowances, which is more costly and tends to favour the bureaucratically competent above others.

Politically, the cut in the basic rate of income tax is somewhere near glorious. Socially it is more doubtful. It gives a bit of money to people who vote, to middle class families. But with the scrapping of the 10p band, it does so at the expense of low-income workers. Those with children will get it back through tax credits, those without will pay.

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