So many Budget kites have been flown this autumn that it is hard to know where to begin.
The clearest message from Rachel Reeves came at the IMF a week ago when she insisted that those with the ‘broadest shoulders’ should bear the burden of closing the chasm in the public finances.
The Chancellor went one step further by indicating she wants to create more headroom in her second Budget, having spent much of the last year playing catch-up in the effort to steady the public finances.
The difficulty in assessing the latest series of leaks is that Reeves is no longer in sole charge of the Budget process.
Desperation in Downing Street means the Prime Minister’s team, which includes Treasury refugee Darren Jones, must be on board. The latest leak is that the Government is considering a 1p rise in income tax. If this were applied to all taxpayers, it would raise a decent £8billion.
Economists argue that the manifesto promise not to raise VAT, National Insurance or income tax led to poor outcomes, and a more honest and transparent approach is required. A penny or even two on income tax would help fill the black hole and avoid messing around with pensions, ISAs and other savings. One suspects that the Treasury, which has delivered the longest tax code in the G7, would still want to fiddle with perceived wealth levies.
Caught in the headlights: Rachel Reeves’ endorsement of a freeze on income tax allowances unleashed a revenue gusher which will be worth £38billion a year by 2029-30
Reality is the manifesto pledge that ‘Labour will not increase taxes on working people’ has already been breached. The rise in employers’ National Insurance Contributions has caused serious grief for working people. It savaged payrolls and added to food prices, which fall heavily on the least well-off.
The promise not to raise income tax also was a fiction. Reeves’ endorsement of a freeze on income tax allowances unleashed a revenue gusher which will be worth £38billion a year by 2029-30.
Reeves’ pal Nick Thomas-Symonds, the Paymaster General, swatted away suggestions that an income tax rise is on the way. The denial is meaningless in that working people are already paying a heavy price.
Every tax increase has behavioural consequences. Reeves’ Budget of a year ago has chased away not just the rich, but well-paid tech workers and entrepreneurs who have scurried off to foreign parts. That can only damage further the growth agenda.
Losing bet
Among my favourite movies is the 1988 film Eight Men Out, which dramatises the 1919 Black Sox Scandal.
The line ‘say it ain’t so, Joe’ famously was shouted at ‘Shoeless’ Joe Jackson by a small boy outraged at charges of match-fixing. Those sentiments were set in the American psyche for a century, with a ban on sports betting except in limited settings such as Las Vegas casinos.
The rise in online betting, much of it promoted by UK betting firms based in Gibraltar, drove a coach and horses through legal restraints.
UK-founded betting firms such as Entain, Flutter and Bet 365 have been beneficiaries of US sports gaming, grabbing a big share of the £10.5billion market.
The revelation that more than 30 people, including National Basketball Association star Terry Rozier of the Miami Heat, have been arrested by the FBI on charges of supplying inside information on players, is a huge shock.
Rozier and others allegedly supplied intelligence to organised crime on how individual players would perform during matches.
Some of the bets placed reached a dizzying $200,000 or more, raising the suspicions of the authorities. Investors should gird their loins for the fallout.
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