THE big news since my last column is obviously the Budget, which took place last week. The task of this budget was to help those hard working people who are struggling to make ends meet.
This is obviously a real challenge and needed to address the gap between rich and poor, reduce the levels of child poverty and fuel poverty, and protect pensioners. In large parts this budget has achieved just that.
After just 10 months of influence in the Coalition Government a range of manifesto pledges have been, or are being, delivered.
We have re-cast the British taxation system so that the burden falls most heavily on the rich and slowly but surely we are lifting it from the poor. Lifting the personal tax allowance by £1,000 has taken 880,000 people across Britain out of tax altogether and everyone paying the basic rate will get a tax cut.
Next year the personal allowance will rise by another £630, meaning a further 240,000 UK taxpayers will pay no Income Tax at all.
In less than a year the link between the old age pension and earnings has been re-established. This means that someone reaching a pension age this year will have on average an extra £15,000 during their retirement.
Furthermore, every year there will be a minimum 2.5% increase in the Old Age Pension and no more insulting 75p’s.
The 50% tax rate has been maintained for those who have incomes over £150,000 per year. Capital Gains Tax for those on high incomes has been increased from 18% to 28% so no “fat cat” will pay less tax on their income than their cleaners as happened under Labour. The Bank Levy of £2.5bn per year will also run for at least four years and will raise £10bn over the life of this parliament.
And this budget is another step along the path to increasing fairness for all. It was already the case that as of April, 23 million basic rate payers will get a £200 tax cut.
This Budget goes further – 25 million will benefit by another £126 next year (in cash terms). By 2012-13 we will have lifted over 1.1 million people on low incomes out of paying tax altogether.
In Wales alone, over one million hard working people will pay £200 less in Income Tax in 2011-12 while 41,000 people will pay no tax at all from next month. Over 1.13 million people will pay £126 less in Income Tax in 2012-13 and a combined 51,000 people will pay no Income Tax at all by the end of the 2012-13 financial year.
Labour’s plans for a 5p hike in the price of fuel per litre have been stopped. Instead fuel prices will be cut by 1p. Petrol prices have gone up by around 18p a litre since the autumn Spending Review and I am aware that this is hurting people.
We are going to increase taxes on the oil companies who are benefiting from soaring world oil prices, to help those who are struggling as a result. The Government has also submitted a formal derogation request to the European Council for a rural fuel rebate.
This has been Liberal Democrat long term party policy and, whilst initially it will run in the Scottish Isles, I hope that in time it will be extended to rural areas in Wales such as Brecon and Radnorshire.
The Budget takes action on youth unemployment, by funding an additional 50,000 new apprenticeships and an additional 80,000 work experience places.
It will encourage business investment in deprived areas with 21 Enterprise Zones, and it will support small businesses by exempting them from the burden of new regulation for three years.
This budget is good for Wales, not only in terms of Income Tax but also in many other areas. The news on enterprise zones is extremely welcome in terms of bringing investment into Wales and promoting Wales as a business centre.
It will now be the responsibility of the UK Government to work with the Welsh Assembly Government to ensure that the Welsh Economy does not lose out – particularly when competing against enterprise zones near border areas, such as those zones in Bristol and Birmingham.
The work of reducing inequality is by no means complete but this budget is another important step in the right direction.