The Tory budget was released yesterday with implications for commuters already setting in; the rest of it will hit us in early next year. Here, we look at the core issues of the budget and their eventual outcomes.
The 1 penny reduction on fuel duty
This is supposed to calm the anger of motorists who have been suffering from a steady increase in fuel prices, but, here’s the kicker, it’s being supposed that the reduction in the measly fuel prices will be compensated from the side of the oil companies. Sure it’s easy to hate the faceless oil and gas producers; however they in turn will of course raise their price of fuel from their retail position. The result being that nobody gains anything, and pump prices will continue to rise.
The Personal Tax Allowance has been increased to £8,105
If you’re earning any amount above £8,105, you’re liable to pay income tax on it. The current minimum amount of remuneration on which student loans have to be paid back on is £15,000 pa. This seems like a very reasonable step: someone on the minimum wage earning roughly £160 per week would equate to earning roughly £7,600. This means that those on minimum wage won’t have to pay Income Tax at all, and others will see their income increase by a good £500 from the next tax year (beginning on 6th April) or by £1,500 compared to the current. This is a good step for stimulating the consumer market and growth.
Further increases on Alcohol and Tobacco
There is a rise of 4p on a pint of beer, 15 p on wine and 54p on spirits. The rise in alcohol prices may cause an even bigger burden on an already struggling pub culture. Whereas, however, the rise in alcohol prices is not likely to make those that enjoy a drink or two (or more) stop drinking, the rise in ciagarette prices may see more smokers giving up. Retaining the 2% growth on tobacco duty, a 20 pack will cost an extra 50p. If we overlook the evils of the tobacco companies and focus on the money they bring into the economy, then this may not be a wise decision. Smokers are not likely to give up their addiction that easily, and with an already growing problem in illegal tobacco, this may cause more problems than solutions in the long run.
Good News for Businesses
On a good note, we turn our focus on what I think is the best thing to come out of the budget: the 2% reduction in Corporation Tax. It is easy to forget that without big companies operating through our city, we would not be the metropolitan that we are. As I mentioned in my previous article (Offshore, Onshore), the tax input from these companies amounts to billions. Therefore by reducing the amount of tax we charge these companies, the more likely we are to attract more business from these high end consortiums.
There are other issues in the budget as well; however these are the key issues that will have the biggest impact on our economy in the upcoming years. Only time will tell if the effect of these change pays off and economic growth is stimulted.