What The Fark!

Dear oh dear, what a difference a day makes in politics and indeed in tax!

I must congratulate our "respected" Prime Minister and Chancellor for their astute footwork in trying to dig themselves out of their own "self dug" graves.

Quite whether they will still be in orifice by the end of this year remains to be seen.

Confused?

So am I!

In 1999, with much fanfare and hubris Gordon Brown (never one to hide is "accomplishments" from the world) announced the introduction of a 10p tax band...to help the less well off.

In 2007, Gordon Brown with much fanfare and hubris announced the reduction of the 22% tax band to 20%.

Hidden within the morass of papers spewed out by the Treasury was a wee note that said Brown would be abolishing the 10P band too.

Funny that he didn't mention that during the his 2007 budget speech!

Anyhoo, fast forward one year, facing meltdown in the local elections Labour MPs suddenly realised that the abolition of the 10p tax band was not going to be popular. They mounted a very noisy and vocal rearguard action to try to stave off electoral defeat, and appealed to Brown and Daring to rescind the 10p abolition.

Alas their protestations were to no avail, Darling said in April that budgets cannot be rewritten - the 10p abolition was here to stay. Indeed, he stated very clearly that he could not even afford to compensate those who had been hurt by its abolition (by the way, Brown still contends that via his crappy tax credit system no one is disadvantaged - but that's another story for another day).

Can you guess what happened next children?

Yes, that's right, Labour were well and truly farked over in the local elections; they scored the lowest percentage of votes since 1349 (or thereabouts).

Moving forward but one month, Frank Field and his chums scented blood and threatened (a threat that was taken very seriously) to defeat the Finance Bill. The Finance Bill is of course sacrosanct.

On top of this Brown faced defeat at the Crewe by election, therefore a political and financial bribe of staggering proportions was required.

The solution?

So simple, so obvious, so expensive!

Raise the tax allowances by £600, thus offsetting the negative impact of the abolition of the 10p rate.

The good news is that this gives very basic rate taxpayer a nice £120 windfall, even those who were not negatively impacted by the 10p abolition.

The bad news?

1 The taxpayers will have to pay for the government's bribe (as this money is being "borrowed" from us).

2 This is only effective for this year, next year Darling will have to come up with another solution (want to bet he is no longer in the job?).

3 Had the Chancellor been able to target the relief to only those who were negatively impacted by the 10p abolition, it would have cost us a "mere" £1BN. The solution he has used will cost us £2.7BN.

3 It's messy, confusing and entirely an own goal given that this is a mess of Brown's own creation.

Confused?

Well, I don't blame you.

Given that HMRC have to deal with the never ending shit spewed out by this government, it is hardly surprising that the tax system is confusing, unwieldy and prone to terrible errors.

Call me naive, but wouldn't it be better for the government to simplify the tax system (reduce the bureaucracy, cut the rates, cut the number of taxes and to use VAT to soak up tax take shortfalls) and to stop farking around with it?

Wouldn't that really be best for the country?

The trouble is, Brown doesn't do "simple".

He is the architect of his own downfall, let us hope he goes quickly.

Tax does have to be taxing.

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