What on earth was the Treasury thinking, as it busily leaked details of the Budget left, right and centre while failing to alert anyone to the biggest revenue-raising measure of all? George Osborne talked about the abolition of age-related allowances, which will cost some pensioners several hundred pounds a year, as a “tax simplification”. Did he think the over-65s would be grateful? Or did he just not think about the position of decent middle-income pensioners at all?
Whatever the truth, it is certainly the case that this “stealth tax” has upset a very important political group. Judging by the emails and phone calls I have already received, there is widespread anger out there.
The Chancellor’s decision to reduce the real value of older people’s personal allowances means they will have to pay more tax than would otherwise be the case. For future pensioners, the impact will be to reduce their income by around £250 a year. This only affects the middle classes – the four and a half million or so older people who did put some money by for their future. Around half of pensioners have incomes below £10,000 a year and aren’t affected, as they pay no tax. The highest income pensioners are also unaffected, as the age allowance is withdrawn once incomes rise above about £24,000 a year.
It is those with incomes between about £10,500 and £24,000 a year – the “squeezed middle” – who have just been squeezed some more. These are people who saved to provide themselves with a decent income in retirement; not a lavish lifestyle, but enough to enable them to look after themselves and their families. So it is from this particular group that the Chancellor intends to take over £1 billion a year in extra tax.
These are the very people who have already been hit by the recent policy of ultra-low interest rates, which took away much of the savings income they had been expecting to live on. And then the Bank of England’s money-printing, gilt-buying spree – called quantitative easing – hurt them again as it led to high inflation and falling annuity rates, as well as hitting people in income drawdown very hard, too. Many of these pensioners feel they have already suffered a series of stealth raids on their incomes and they were outraged that the Chancellor announced so casually yesterday that he was piling on yet more pain. Read on and comment » | Ros Altmann | Thursday, March 22, 2012
My comment:
Excellent article!
George Osborne has shown that he and his cronies have nothing but contempt for all the little people. For this public school cabal, if you are not mega-rich and probably working in the financial sector, you're worthless. The little people be damned; we're going to look after the fat cats.
One of the things that troubles me greatly is the ultra-low interest rates which we now have. For pensioners and those dependent on generating an income from their savings, this is a catastrophe.
These idiots believe that capitalism is about rewarding the high earners with ever more tax breaks and bonuses. They seem to have little understanding that paying interest on accumulated capital in the form of savings belongs every bit as much to capitalism as rewarding risk-takers.
Any responsible government should be rewarding savers. People who save can look after themselves on rainy days and in retirement. Financially-independent people are not going to become a burden on the state. This budget did nothing for savers; in fact, it sent out the message that saving is a worthless pursuit.
The day of reckoning will surely come for this reckless and irresponsible government. And it should be noted that I write as a lifelong Conservative voter. No more! – © Mark
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