In many ways, yesterday’s budget could be summarised as spend now, tax later.
If Philip Hammond has learned from the history of taxation, we could see some interesting developments in the October 29th Budget.
When we look back at some of the taxes we’ve had in the past, it is clear that taxation has had to continually change to keep pace with the times. In 18th century Britain, a hat tax was introduced to raise revenue from the gentrified. It was effectively a stamp duty on the head-dress of the more wealthy – the bigger the hat, the bigger the tax. Top hats had a top rate of 14%.
Candles were also viewed as an extravagance in Georgian England and therefore drew the interest of the exchequer, leading to the introduction of a candle tax. Similar taxes to target the wealthy at the time included, a beard tax introduced by Henry VIII, or an 18th century window tax (the bigger the house, the more windows it would have and the more tax the owners would pay). Continue reading
Pressure eases on public finances, but not enough to finance a big Birthday gift without recourse to higher taxes.
Tax has been a big talking point in recent years – we’ve had the sugar tax, the pasty tax, the plastic bag tax, and even the caravan tax. And locally, corporation tax long hogged the headlines. Some tax changes have been significant, others have been gimmicks. But the reality is that when it comes to dealing with the public finances, spending cuts rather than revenue-raising have been doing the heavy lifting. This dynamic though is about to change, and the contents of the recently launched party manifestos underline this. Continue reading
The Bank of England surprised last week by not cutting interest rates. The accompanying statement showed that most members expect to loosen monetary policy at August’s meeting. But given that expectation it left a perculiar question in its aftermath. If then, why not now? Continue reading
In government, as in football, budget isn’t everything. The English Premier League is the biggest money soccer championship in the world, but yet one of the minnows in financial terms has just claimed the title. Continue reading
Last week’s UK economic news was filled with little wobbles. First, there were signs that the UK’s labour market may be finally cooling. Second, UK retailers had a very poor March. Third, the Chancellor missed his borrowing targets for the last fiscal year. All small misses, but misses nonetheless.