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Category Archives: taxation

VAT: Progressive or Regressive?

In his emergency Budget in June 2010, George Osborne, the Chancellor, announced an increase in VAT from 17.5% to 20.0% to take place from the beginning of 2011. When this came into place this year, Osborne, in an interview with the Today programme on radio on 4th January 2011, said: “If you look at the population and how much they … Continue reading

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A neutral Budget with a few surprises

George Osborne, the chancellor, introduced his second Budget yesterday saying: “This is not a tax-raising Budget, nor can we afford a give-away.”  Basically, he was completely constrained by the emergency Budget last year and the October Spending Review. He was further handicapped by a downgrade in the forecasts for economic growth, coming from the Office for Budget Responsibility. Only five … Continue reading

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Pensioners have been ‘hit particularly hard’ by the recession

Both pensioners and the poorest households have been badly hit by the recent recession, according to a report produced by the Institute of Fiscal Studies (IFS) and funded by the BBC. The IFS estimates that in the three years from 2008 to 2011 real household incomes will have fallen by 1.6%, or £360 per year. This means that households are … Continue reading

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VAT has now risen to 20% in the UK

The rate of Value Added Tax went up at midnight from 17.5% to 20.0%. This move was flagged in advance by the coalition government as being a necessary part of their austerity measures. On the one hand they are slashing spending across most government departments and on the other hand they are trying to raise taxes as well in an … Continue reading

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Taxes on tobacco: What works and what doesn’t work

Just come across an interesting article published this week entitled “Tobacco excise tax structure: Implications for public health” by Chaloupka, et al. and published by voxeu.org. It doesn’t sound wildly amusing on the surface but contains some interesting EU-wide research which is very relevant to microeconomics in terms of the effects of specific and ad valorem excise taxes. In February … Continue reading

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Higher than expected public sector net borrowing

Net borrowing in June reached £14.5bn according to figures just published by the ONS. This is slightly lower than the £14.7bn recorded in June 2009 but the markets had been expecting a figure around the £13bn mark. This is partly because tax revenues had been performing well in the previous couple of months. However, the Institute of Fiscal Studies has … Continue reading

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A rise in VAT would cost 163,000 jobs

This is the headline figure published today by the British Retail Consortium following a study carried our by the Centre for Economics and Business Research using its model of the UK economy. They found that an increase in VAT to 20% from its current level of 17.5% would result in the loss of 163,000 jobs over four years and a … Continue reading

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Growth to pick up in OECD countries

The latest OECD Economic Outlook says that GDP is projected to rise by 2.7% this year and 2.8% in 2011, across the OECD countries. Previous forecasts last November expected growth this year to by only 1.9% and 2.5% next year. Whilst economic activity is picking up faster than expected, the OECD warned that sovereign debt markets and overheating in emerging-market … Continue reading

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Pushing us towards the death spiral

Yesterday the government announced that it was making initial cuts in public spending of £6.2bn largely by cutting what the Chancellor, George Osborne, called “wasteful spending.” These include cuts in consultancy, travel costs and cutbacks in various departments.  But this isn’t the whole picture on government spending reductions as we still have an emergency Budget to come on 22nd June. … Continue reading

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Record borrowing to be followed by record spending cuts?

Public sector net borrowing reached a total of £163.4bn in 2009-2010 which was about £3bn lower than forecast by the Chancellor in the April Budget, but was significantly higher than the £96.5bn of borrowing in the previous financial year. This was the largest borrowing figure since the Second World War and is the equivalent to 11.6% of GDP. National debt, … Continue reading

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