Pre Budget Report

So this year's pre-budget report is now out. Not sure how interested we should be, but it appears that MPs really aren't that bothered: (from Obo)

 
So NI is to rise by 0.5% to raise another £3bn a year, which is excellent, more taxes is always good news.

VAT is to go back to 17.5%. Either they shouldn't have made the change in the first place (as the results are negligible, and consumers barely notice) or it should be kept at 15%.

I'm slowly turning towards the opinion that huge government spending may not be thes best way out of recession, I'd prefer a method of lower taxation and reduced regulation to let the free market find it's way out of the recession, this also doesn't have the unfortunate side effect of racking up huge debts and being forced to increase taxes and reduce spending at a later date. Oh yes but the Labour government do not have to worry about that, as they will not be in power when the time comes to fully deal with the consequences of their decisions.

Bankers bonuses are to be taxed with a one-off 50% tax on bonuses of more than £25 000 for a year. I'm still unsure of my opinion on this matter. I understand that bankers in banks that we rescued are effectively living off the state, and paying huge bonuses is therefore ridiculous as it was excessive risk taking and irresponsible banking that have worsened the situation and lead to the necessity of our support in the first place (ish). However I fully understand that by not paying bankers bonuses talented employees will move elsewhere, this is described excellently in this Adam Smith Institute article. For once I seem to be agreeing with a labour policy, on the surface anyway. The fact that it is a single year solution may encourage employees to stay on the premise that they will be earning highly again the following year, and the plan to keep a close eye on other methods of increasing bankers pay through backdated salaries etc is also a good idea.

One thing that I found ridiculous in the PBR was the forecasts of economic performance.

• Economy forecast to shrink 4.75% in 2009, worse than 3.5% forecast in April
• Growth of 1%-1.5% expected in 2010 and 3.5% in 2011 and 2012

So the previous forecast for economic shrink was an underestimation, yet they believe that in a year the economy will recover over 5% from a shrink of 4.75% to a growth of 1-1.5%?! Really? And then a prediction of 3.5% the following year? We spent the majority of the growth years (2000-2007) between 2 and 3% growth, yet they have forecast growth of 3.5%? ARE THEY MAD?

"New 10% tax on income from patents to boost science development."

I have very little knowledge on the area, but surely patents are there to encourage scientific development, in their absence there would be no advantage to scientific innovation as others will simply copy the idea. If this is in fact the case, then surely taxing patents is like putting a tax on cycling, in order to spend the money on encouraging cycling.