‘Painful, continuing and unresolved’ – Osborne’s Budget options

George Osborne really wants to get the 50p tax rate abolition done and dusted at this Budget if at all possible. The political advice to him has been if you’re going to do this then “the sooner the better,”  not closer to a general election.

And there’s another factor making George Osborne engage more than you might think with the Lib Dems’ demands (spelled out by Vince Cable on Radio 4 this morning) that there must be some kind of wealth/property tax in return. George Osborne knows that if there isn’t a wealth tax of some kind in this parliament, the Lib Dems and Labour will go into the next election promising one and potentially out-flanking the Tories.

I’m told Vince Cable’s words should not be seen as a sign that any deal is close. The work is painful, continuing and unresolved … but any Budget proposals have to be signed off by Friday, 16 March to give the Office for Budget Responsiblity time to get their forecasts together. So there’s not much time to seal a deal and much work to be done if it is to happen.

Back on child benefit, I’ve been trying to find out how much the Treasury would lose in cash if they raised the threshold for child benefit from the proposed £43,000, the 40p tax threshold, to £50,000 – a figure that’s supposed to be attractive to the chancellor.

I’m afraid I haven’t found out. But I have found out that there are around one million taxpayers in that catchment. I don’t know how many of them are living together or have kids or both … but you might take a punt on the following: raising the cliff edge to £50k could mean the Chancellor loses between 20 per cent to 30 per cent of the projected £2.4bn savings. Quite a hole to fill.

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