Fuel foolery, merger warnings and Budgetary boons

New Budget makes some sensible changes...and some mad ones too


Comment What a difference a new government makes, eh? Only parts of the budget are entirely lunatic rather than all of it.

I dealt with the playing around with fuel duty and further taxation on oil companies years ago when it was being proposed by idiot Lefties rather than idiot Tories. That it's someone from supposedly my side of the fence proposing it today makes it no less idiotic.

Setting high prices for something means that we'd like to encourage companies to find more of it and encourage people to use less of it. Lowering tax on fuel and raising tax on profits from finding fuel does the opposite; we really cannot solve a supply shortage by reducing future supply nor reduce demand by reducing taxation upon demand.

The plan to subsidise deposits for first-time home buyers is even more glaringly insane. We've just seen most of the financial system of the western world collapse from the error of lending the money to buy a house to people who cannot afford to buy a house. As a method of digging our way out of this rubble lending more money to more people who cannot afford houses lacks a certain logic to it.

As to the macroeconomics of the budget, the inflation, growth, budget deficit, additions to the national debt: not much can be said really. This is the part of economics that not just you or I, but no one really knows much about. Ninety-nine times out of a hundred, the best prediction you can make about any of these large-scale indicators is that they'll be within 1 or 2 per cent next year of whatever they are this year. Which particular school of economics you belong to, the models you use and even the political party you support doesn't increase accuracy much above this in any direction or for any variable.

Merger warning...

There are, however, three areas that I think fascinating. The first is this mooted merging of national insurance and the income tax system. Historically NI was supposed to pay for the NHS, unemployment benefits and your old age pension. We can quibble about exactly how those should be organised (maybe a little more private, a little less national, in the NHS, but a healthcare system largely financed by taxation seems a worthy enough goal etc) but the notion that there should be, at the very least, a tax-financed welfare safety net is just fine by all – except perhaps for those who get all sweaty over Atlas Shrugged. This has all rather withered away, the link between NI and these things, the only one left is the old age pension, where you must have paid X years of stamp in order to get one.

Even this is now to go, with the pension being paid to all who are citizens of the appropriate age. There seems to be no reason to have the two taxes upon income separate any more: so, the idea to merge the two.

Well, actually, there is in fact a reason why you wouldn't want to merge the two. An entirely political one. If people are paying two separate taxes, then some/all of them will think that they're not quite the same thing. That income tax isn't really 32, 33 per cent as its starting point. Thus tax levels can be higher than they could be with only that one merged tax. And thus, if you're a low tax, small state kinda guy (as Osborne is said to be and as I certainly am) then you'd like the merger because it brings home to people quite how much they are paying. And if you're a large state, high tax kind of person, you'll be against the merger for exactly the same reason.

This has actually been pushed out to consultation, which is a good thing: for so far the debate has been about merging income tax and employees' NI. However, there is also another tax there, employers' NI. The general assumption that most make is that this really is paid by the employers: The general assumption made by most economists is that it is paid by the employees.*

So our starting rate of income tax is not the 20 per cent most think it is, nor even the 32 per cent of the mooted merged system, but over 40 per cent when the three taxes are added together. And the top tax rate isn't 50 per cent, it's more like 62 per cent (employers' NI is as a percentage of pre-income tax and employees' NI gross wages, meaning that you cannot just add the three rates to get a total).

From a Tory, economic liberal, point of view, merging all three would put something of a stop to the cries that this is a low tax country at least as far as incomes are concerned. Which is why I rather expect to see some pushback on this from the left side of the aisle.

Similar topics

Narrower topics


Other stories you might like

  • Colocation consolidation: Analysts look at what's driving the feeding frenzy
    Sometimes a half-sized shipping container at the base of a cell tower is all you need

    Analysis Colocation facilities aren't just a place to drop a couple of servers anymore. Many are quickly becoming full-fledged infrastructure-as-a-service providers as they embrace new consumption-based models and place a stronger emphasis on networking and edge connectivity.

    But supporting the growing menagerie of value-added services takes a substantial footprint and an even larger customer base, a dynamic that's driven a wave of consolidation throughout the industry, analysts from Forrester Research and Gartner told The Register.

    "You can only provide those value-added services if you're big enough," Forrester research director Glenn O'Donnell said.

    Continue reading
  • D-Wave deploys first US-based Advantage quantum system
    For those that want to keep their data in the homeland

    Quantum computing outfit D-Wave Systems has announced availability of an Advantage quantum computer accessible via the cloud but physically located in the US, a key move for selling quantum services to American customers.

    D-Wave reported that the newly deployed system is the first of its Advantage line of quantum computers available via its Leap quantum cloud service that is physically located in the US, rather than operating out of D-Wave’s facilities in British Columbia.

    The new system is based at the University of Southern California, as part of the USC-Lockheed Martin Quantum Computing Center hosted at USC’s Information Sciences Institute, a factor that may encourage US organizations interested in evaluating quantum computing that are likely to want the assurance of accessing facilities based in the same country.

    Continue reading
  • Bosses using AI to hire candidates risk discriminating against disabled applicants
    US publishes technical guide to help organizations avoid violating Americans with Disabilities Act

    The Biden administration and Department of Justice have warned employers using AI software for recruitment purposes to take extra steps to support disabled job applicants or they risk violating the Americans with Disabilities Act (ADA).

    Under the ADA, employers must provide adequate accommodations to all qualified disabled job seekers so they can fairly take part in the application process. But the increasing rollout of machine learning algorithms by companies in their hiring processes opens new possibilities that can disadvantage candidates with disabilities. 

    The Equal Employment Opportunity Commission (EEOC) and the DoJ published a new document this week, providing technical guidance to ensure companies don't violate ADA when using AI technology for recruitment purposes.

    Continue reading
  • How ICE became a $2.8b domestic surveillance agency
    Your US tax dollars at work

    The US Immigration and Customs Enforcement (ICE) agency has spent about $2.8 billion over the past 14 years on a massive surveillance "dragnet" that uses big data and facial-recognition technology to secretly spy on most Americans, according to a report from Georgetown Law's Center on Privacy and Technology.

    The research took two years and included "hundreds" of Freedom of Information Act requests, along with reviews of ICE's contracting and procurement records. It details how ICE surveillance spending jumped from about $71 million annually in 2008 to about $388 million per year as of 2021. The network it has purchased with this $2.8 billion means that "ICE now operates as a domestic surveillance agency" and its methods cross "legal and ethical lines," the report concludes.

    ICE did not respond to The Register's request for comment.

    Continue reading
  • Fully automated AI networks less than 5 years away, reckons Juniper CEO
    You robot kids, get off my LAN

    AI will completely automate the network within five years, Juniper CEO Rami Rahim boasted during the company’s Global Summit this week.

    “I truly believe that just as there is this need today for a self-driving automobile, the future is around a self-driving network where humans literally have to do nothing,” he said. “It's probably weird for people to hear the CEO of a networking company say that… but that's exactly what we should be wishing for.”

    Rahim believes AI-driven automation is the latest phase in computer networking’s evolution, which began with the rise of TCP/IP and the internet, was accelerated by faster and more efficient silicon, and then made manageable by advances in software.

    Continue reading

Biting the hand that feeds IT © 1998–2022