Saturday 17 March 2012

Letter 56: Will George give benefits to the super-rich at Budget time?

"So after a few days visiting our "special friends" in the USA, with Nick manning the helm, no doubt your thoughts have turned this weekend to next week's budget. I've been thinking about it myself, particularly the news that George is expected to slash the top rate of income tax from 50p to 40p. Against a backdrop of benefit cuts and austerity measures for the poor, it seems ironic that the super rich will be able to celebrate BENEFITTING from Coalition policies. But let's hold back on the Bollinger for a few more minutes - things are very different at the other end of the financial spectrum. I'm sure you're aware that the 14% increase in homelessness is simply the tip of the iceberg. Also, from April things can only get worse for those families whose homes have been repossessed because that's when homeless charities expect to lose 30% of their funding from councils. 
You've been swayed by the intellectual argument that the 50p tax doesn't bring in sufficient funds... but what about the moral one? Take a banker on his basic salary - Stephen Hester and £1,200,000 (!) On that he pays top rate tax of £525,000. When George slashes the rate from 50p to 40p, Stephen  will gain £115,000 extra, just for staying in the UK. Over £2,000 increased disposable income for Stephen, every week. Evidence shows (by the way)that the wealthy tend to hang onto their cash, while the poor tend to spend it, thus keeping the money - and the economy, moving. It's been reported by the IFS that the poorest 20% of households will see their incomes fall by about 1.5% in 2012-13 and that your government will not be able to meet your targets for cutting child poverty.
Not much to celebrate there, eh? Hardly progressive.
With best wishes ..." 

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