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Death and taxes
Another day, another mini-Budget. The Treasury used to pride itself on twice yearly ‘fiscal events’, as it called them. But thanks to coronavirus, Rishi Sunak these days resembles not so much a chancellor as the host of the National Lottery (Live!) Draw. Each week, a waiting nation finds out whether it will get its share of the billions on offer. Some get lucky with the largesse, some just end up with meaningless balls.
But as today proved, even if you lose out one week, it’s always worth waiting for the Rishi rollover. And his new package of support was undeniably huge, offering unprecedented aid to cover an estimated 95% of the UK’s five million self-employed. Sunak was not making an idle boast when he said that “by any international standards”, the new scheme was “one of the most generous and comprehensive” anywhere in the world.
Of course, there are still some losers, most notably those higher earners (in finance, consultancy and law?) whose profits are more than the £50,000 cap the package imposes, and those who have only just moved into self-employed status. People who earned little in their first couple of years, then more in the past year, will be hit by the average income they have to provide under the three-year test. Those who depend on self-employment for 49% of their income will get zilch.
Given how notoriously complex and difficult it is to get direct help to this group of earners, there were always going to be flaws. Yet the biggest downer is not the level of support but its timing. Again, the Treasury have a solid logic in waiting until June (tax returns need four weeks) but that still leaves lots of people worried about how they pay their bills in the meantime. Given that the employed being ‘furloughed’ also have to wait until late next month for any support, April is going to be pretty precarious for many families.
Still, now that the package is out there, it’s surely not beyond the wit of the banks to offer interest free loans to those affected - particularly as the state is guaranteeing a lump sum in June. Those banks bailed out by the taxpayer (looking at you RBS, Lloyds) owe a moral duty never mind a financial debt to the public to do their bit right now. Some already offer free overdraft extensions, but loans would make a huge difference. As for Universal Credit, maybe the next Rishi rollover will be an announcement that advances (aka loans) could become ‘grants’.
If anyone needed a reminder of just how generous the public are being at a time like this, tonight’s ClapForNHS and ClapForCarers confirmed it. I bet there were few dry eyes around the country as people turned out in great numbers on their doorsteps and balconies to applaud those on the real front line right now. The latest volunteer figure tonight, showing 670,663 people have signed up to help out, underlined that sense of national togetherness.
But soon after Rishi Sunak spoke this evening, there was another statistic that was altogether more grim. The Department of Health’s coronavirus death toll rose by 115 to 578. The upward curve is getting steeper. The two morgues being erected in the new Nightingale Hospital say more than anything else about how serious things are going to be.
Even though Prof Neil Ferguson thinks the peak may start flattening in three weeks’ time, April really looks like it will be the cruellest month for hundreds of loved ones devastated by this awful disease.
Everyone is hoping that Prof Ferguson is proved right and that the worst could be over by the time we get to May. Yet the health of the economy may take longer to recover than many assumed. The big spike in unemployment in the US today (3.3million) underscored that a global recession is on its way.
Sunak today also made plain that his package of support could be long term too, saying his scheme would be extended beyond its three-month lifespan “if necessary”. He kind of gave the game away when he said his plan was for “tens of billions” of support for the self-employed, much greater than the £9bn for his current plan to June.
The chancellor also had an ominous warning about who would eventually have to pay for all this largesse. And like the lottery, that’s everyone who buys a ticket. His line that “it is now much harder to justify the inconsistent contributions between people of different employment statuses” was a real signal that Philip Hammond-style national insurance hikes are back on the agenda for White Van Man and Woman.
This could provide a real opening for Labour too. You can bet that more than 40 Tory backbenchers would be ready to rebel over any such tax hikes and no new Labour leader is going to support a whack on such a key group of ‘aspirational’ voters. Which in turn may prompt those Tory MPs to support, wait for it, Labour’s own plans to tax the top 5% more. Stranger things have happened.
The reality is that these bills are so large though that all of us may well end up paying more in tax, one way or another (VAT is a regressive but tempting option). Benjamin Franklin famously said that there was only one certainty in life and that was death and taxes. 2020 will have both. It was actually Daniel Defoe who first coined the phrase that death and taxes were ‘certain’. And he wrote that just four years after his early work: A Journal of The Plague Year.
Right now, taxes down the track feel like a small price to pay if the new spending spree means people can be encouraged not to work and to stem the spread of this modern plague. We’ll find out next month just how well that plan is working. Unlike our NHS and care workers, the applause for our politicians will be on hold until the summer.
Quote Of The Day
“Now we’re treating everybody the same at a very, very significant cost, we as a country and as a society...are figuring out once we get through this, how we then right the ship afterwards”.
Rishi Sunak hints that tax rises are inevitable post-coronavirus
Thursday Cheat Sheet
The Home Office unveiled new police powers to enforce the coronavirus lockdown, including the right to “instruct” people to go home from outdoor areas. They can use “reasonable force” to do so.
Those who breach the lockdown rules face a fixed penalty notice of £60, which will be lowered to £30 if paid within 14 days. But repeat offenders face a maximum of £960 in fines.
Anyone found guilty of “coronavirus coughing” at emergency workers could be imprisoned for up to two years, the Crown Prosecution Service said.
Britain has not joined an EU-wide scheme for buying life-saving ventilators – because the government did not receive an email invitation in time, No.10 revealed. Earlier, Lib Dem MP Layla Moran had accused the PM of putting “Brexit over breathing”.
Boris Johnson should take online questions from a group of select committee chairs twice a week while Parliament is shut, defence committee chairman Tobias Ellwood said.
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