Budget - March 2016

AutomaticEarth · Post by **AutomaticEarth** » 16 Mar 2016, 09:19

Thought I'd start a thread to discuss today's budget.

My initial views. Probably we'll get:

- More duty on fuel (not fussed as I drive so little anyway)
- More tax on fags and booze (easy, but not good for pubs that are on the ropes)
- More tax on businesses
- Additional taxes on insurance

emordnilap · Post by **emordnilap** » 16 Mar 2016, 11:05

Despite EU 'commitments'; despite being the 'greenest' government ever; despite the Paris bullshít; despite the evidence, I seriously doubt whether any real issues will be addressed in this budget.

The more we change the climate, the less we do about its consequences.

PS_RalphW · Post by **PS_RalphW** » 16 Mar 2016, 13:24

SO far we have further cuts to corporation tax, further 3.5B in spending cuts,
token tax loopholes being closed and '£12B' to come from cracking down on corporate tax avoidance - the pigs are so dense in the sky they are blocking the sun!

1B less tax on North Sea oil
0.75B for renewables.

Good to see the 'greenest' government getting its priorities right.

Post by **adam2** » 16 Mar 2016, 14:28

I welcome the reduction in corporation tax as I believe that it will encourage more firms to remain in the UK rather than to re-locate to a lower tax country.

I welcome the sugar tax to be levied on sweet soft drinks.

I welcome the freezing of duty on alcoholic drink as I feel drink to be over taxed in this country.

I am opposed to the freezing of duty on road fuel, believing instead that duty could have been increased relatively painlessly at a time of low crude oil prices.

emordnilap · Post by **emordnilap** » 16 Mar 2016, 14:45

During the budget, I think this is worth sharing. Please pass the link on to as many contacts as you have.

If you have any sense at all you will realise that I am wheelchair-bound and to be quite honest the list of what I can’t do is so endless that there’s not much point in me continuing to expand any further.

[...]

Can you explain to me and the myriad others that find themselves in my position, sometimes worse, how decreasing my disability benefit by £120 a month is an incentive for me to get back to work. Perhaps you could outline for me what sort of work people in my condition would be capable of?

PS_RalphW · Post by **PS_RalphW** » 16 Mar 2016, 15:18

Whilst it is obviously a good time to increase road fuel duty, the fact that it is largely a flat rate duty, and VAT is paid on top , means that as fuel gets cheaper , the percentage of the price that is tax goes up. As I understand it, the current breakdown is

Price at pump 102p

VAT 17p

Duty 58.95p

Cost of fuel 26.05p

Tax rate = 290% , in other words 74% of the pump price is tax.

(Is that right? VAT is paid on the duty as well as the fuel?)

A possible option would be to convert the flat rate tax to a simple percentage tax (perhaps a special band of VAT rate ) so that the percentage of tax remained constant. This would represent a permanent tax 'freeze' whilst simultaneously guaranteeing a dramatic increase in tax take as prices rose. That might make the Clarksons of this world feel better until they realise their own innumeracy

emordnilap · Post by **emordnilap** » 16 Mar 2016, 15:24

Now is a good time to get rid of motor tax too. A pointless tax implemented at great cost.

Post by **clv101** » 16 Mar 2016, 15:37

PS_RalphW wrote:Tax rate = 290% , in other words 74% of the pump price is tax.

Indeed, it is remarkable. Also remember that's after the higher taxes levied on the oil extraction industry.

What I find interesting is how little tax electric cars pay compared to the ICE. If the electricity used to charge your Leaf was similarly taxed (or fuel duty was similar to electricity taxation), how would that impact the relative economy of the two technologies?

AutomaticEarth · Post by **AutomaticEarth** » 16 Mar 2016, 15:53

adam2 wrote:I welcome the reduction in corporation tax as I believe that it will encourage more firms to remain in the UK rather than to re-locate to a lower tax country.

I welcome the sugar tax to be levied on sweet soft drinks.

I welcome the freezing of duty on alcoholic drink as I feel drink to be over taxed in this country.

I am opposed to the freezing of duty on road fuel, believing instead that duty could have been increased relatively painlessly at a time of low crude oil prices.

Agree with all points above. Quite happy for fuel duty to rise. I'm well beyond the 40% tax ceiling change so no change.

Business tax should come to Ireland's level - or lower - so that might mean corps might pay more tax. But we may live in hope....

Oil and gas should pay more tax IMHO... to fund renewables....and Scotland's deficit..

PS_RalphW · Post by **PS_RalphW** » 16 Mar 2016, 18:57

It is hard to say how you could decide what an equivalent tax would be between electricity and oil. If it was done on energy content, then it would not be very high. Fuel tax is 7.6p /KWh. Currently electricity is taxed at 5% VAT and costs about 14p /KWh so it would increase to about 21p. That would make fuel cost about 5p a mile, still cheaper than an efficient diesel (about 7p).

If charged on carbon intensity the effect would be less, because the average carbon intensity of electricity is lower than that of diesel or petrol, and energy efficiency, from fuel to wheel is higher.

Of course a petrol head would demand a tax per mile driven, which would make electric cars just as expensive by definition

BTW I don't pay excise duty on either of my cars

Now if both had tax reduced to zero, fuel would be about 25p a litre.
At 16 miles a litre (efficient diesel) that is about 1.8p a mile compared to
3.5p a mile electric, standard rate.

But of course, we know that oil production is not economic at $40 a barrel, so if oil returns to $100, or £1.40 a litre , (23p VAT and 58p duty) the zero
tax price would be 60p a litre = 4.3p a mile.

So at realistic oil prices, electric is cheaper, just

Post by **clv101** » 17 Mar 2016, 18:35

Cuts to income tax (through higher personal allowance), large cuts to capital gains tax rates and (backdated!) tax cuts to North Sea oil and gas.

Further increasing the personal allowance benefits everyone equally - as long as you've got an annual income in excess of £11,100. Brilliant, a direct handout to everyone, except the poor who'll see no benefit.

Cutting capital gains tax rates from 28% to 20% and 18% to 10% firstly only benefits those who realise a significant capital gain and secondly the amount of benefit increases the more capital gain you make. Brilliant, the poor (actually vast majority of population) see none of this hand out, the megarich will benefit by many thousands.

On the North Sea oil and gas... if we don't manage to keep at least half of existing proved reserves in the ground, we're looking at wholly unacceptable, unmanageable climate change impacts. That we're cutting taxation and actually spending £20m of public money on new exploration in this environment beggars belief.

Oh, and on alcohol duty, I'd like to see a two tier system with higher duty for alcohol sold in off-licences, supermarkets and lower duty for that sold at licensed premises. This would recognise the relative social value of a pub over an off-licence.

Post by **adam2** » 17 Mar 2016, 20:01

clv101 wrote:
On the North Sea oil and gas... if we don't manage to keep at least half of existing proved reserves in the ground, we're looking at wholly unacceptable, unmanageable climate change impacts. That we're cutting taxation and actually spending £20m of public money on new exploration in this environment beggars belief.

Oh, and on alcohol duty, I'd like to see a two tier system with higher duty for alcohol sold in off-licences, supermarkets and lower duty for that sold at licensed premises. This would recognise the relative social value of a pub over an off-licence.

Agree WRT North sea oil and gas.
Regrettably I expect that most already proven reserves will be extracted, and that severe climate change is now unavoidable. That is bad enough, but to spend public money on making a known problem undeniably worse is IMHO unforgiveable.

WRT alcohol pricing, I agree that sales via pubs are preferable to supermarket sales on account of the social value of the pub.
I do not believe that differential duty rates would be workable for the simple reason that duty is levied at the point of production or import, and that no simple means exist to determine if a given bottle is destined for the pub or the off licence.

I can however see 2 ways by which a somewhat similar result could be obtained.
Option 1 would be to exempt alcohol sales in a pub from VAT. The already levied excise duty would still be payable as it is now, but the removal of VAT would result in a useful but not excessive saving.
Ideally this should be limited to smaller pubs with less than a certain floor area. Not certain that encouraging the huge "drinking factories" would be a good idea.

Option 2 would be to substantially reduce the excise duty on draught* beer and other draught* alcoholic drinks such as cider and perry.
This would benefit pubs but not supermarkets.
It would also be a green measure since the lower duty would encourage the consumption of draught* products that are supplied in returnable containers, and discourage the drinking of beer and alcopops from disposable cans and bottles that are also often imported over great distances.

* "Draught" would have to be carefully defined to avoid leaving any wiggle room. Something like "supplied in returnable and reusable containers, each container having a capacity of at least 50L."

johnhemming2 · Post by **johnhemming2** » 17 Mar 2016, 20:39

VAT changes are limited by international treaties.

cubes · Post by **cubes** » 20 Mar 2016, 23:36

I'm not sure high prices are the reason people don't go to pubs anymore - they pay far more at nightclubs after all. A change in society has seen less need for them, simple as that imo.

Little John · Post by **Little John** » 20 Mar 2016, 23:57

cubes wrote:I'm not sure high prices are the reason people don't go to pubs anymore - they pay far more at nightclubs after all. A change in society has seen less need for them, simple as that imo.

It's mostly young people who go to nightclubs and mostly on weekends. Pubs used to be (and still often are in the part of the North East I come from) somewhere people of all ages went and, although the peak time was on weekends, they were often frequented during the week as well. In other words, going to a pub was not a special event. It was just somewhere people would naturally go to socialise between sleeping and working.

I do concede, however, that as our society has become more economically and socially atomised, in conjunction with the advent of technologies that allow for virtual socialising, these too have contributed to the decline of the pub as an everyday means of socialising in the real world.

Which is pretty sad, really.