Wednesday, 21 March 2012

Budget brings tax cut to 170,000 in Cornwall - UPDATED

More than 19,000 people in Cornwall will be taken out of the income tax system thanks to today's budget which took forward the Lib Dem policy of raising tax thresholds. Almost 170,000 more will have got a tax cut as a result of the changes.

The biggest demand of the Lib Dems when we entered the coalition government was for a rise in the income tax threshold so that it reaches £10,000 by the time of the next general election. There have been two tranches in the two budgets to date and today the Chancellor announced a third.

The rise of £1100 next April will put another £220 back into the pockets of most workers. The total amount of tax savings will rise to £550 per year.

At the other end of the scale, the new mansion tax - a stamp duty of 7% on the sale of houses worth more than £2m and 15% when these are owned by corporations - was also a Lib Dem demand. We said that the top rate of tax could not be cut (as the Tories demanded) unless the rich were made to pay more of their fair share. Personally, I would have liked to keep the 50p top rate, but the cut to 45p will bring benefits to the richest 1% which will be out-stripped by five to one by the additional tax burdens.

So where does the tipping point come in terms of who is better off and who worse? According to one study* (and it all depends on your personal circumstances such as smoking, driving, children etc) it looks like if you earn £41,650 you're fractionally better off; earn £42,100 and you will be fractionally worse off.

It's not a perfect budget - being in coalition with the Tories meant that some of their preoccupations with the mega-rich had to be accommodated. But overall it will being benefits to millions of people and be paid for in the main by millionaires.

UPDATE - In all the excitement, I forgot to mention regional pay scales. It was and remains a stupid idea that will harm Cornwall immensely. I'm glad to see that Lib Dem MP for St Austell and Newquay Stephen Gilbert has vowed to oppose it.

*Study by the Guardian datablog team.

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