United Kingdom: Tax cuts: what do they mean, what do they bring?

The presentation of the draft budget for the coming year is proceeding as usual in the United Kingdom: the Chancellor leaves his home at 11 Downing Street and brandishes a red chest that looks like a briefcase. It is there that lies the draft budget. He goes directly to the lower chamber, where the chancellor introduces him to the deputies.

But these are not ordinary times: in just five months, the country should leave the EU. A failure of negotiations seems more likely than ever. And: Premier Theresa May recently announced the end of her government's strict savings program at the Conservative Congress. Expectations were high when Chancellor Philip Hammond presented his budget proposal.

Hammond immediately caused a surprise: he announced tax bills of several billion. The tax exemption, whose income tax must be 20%, is expected to rise from 11,850 pounds in April to 12,500 pounds. The higher tax rate of 40% will then be due only for an income of 50,000 pounds – 3,650 pounds above the previous limit. Hammond has promised a tax break of around 900 million pounds to small businesses.

The Chancellor continued to make donations: he announced £ 20.5 billion for the NHS 'troubled health service over the next five years. The extra spending needs to be financed by higher tax revenues than expected – and by a special tax, digital giants such as Google and Facebook from 2020 to pay their profits in the UK. This should be 2% and bring in about 400 million pounds a year.

Why rigid austerity is so controversial

"I can tell the British," Hammond told the MEPs, that their hard work has paid off and that the era of austerity is coming to an end.

But does she really do that?

The rigid austerity policy that began in 2010 is highly controversial in the UK. Due to its close links with the financial sector, the country has suffered particularly from the consequences of the 2008 banking crisis. The state's budget, which largely depended on the sector's revenues, was then squarely affected.

The Conservatives, who took power in 2010, immediately set in motion a stringent austerity course. The official plan: the deficit should be reduced in a few years. Critics have seen in this attempt an attempt to rebuild the state under the pretext of a crisis.

The consequences of the cuts are important. Since 2010, local authorities have lost a fifth of their income. The police will have to earn 17% less money, libraries will receive a third less than in 2010. Prison funds have been reduced by one-fifth, while the number of people living in prisons has been reduced by one-fifth. attacks against their guards doubled. The NHS Health Service is chronically underfunded.

Tens of thousands of nursing jobs remain vacant. Thousands of doctors settle abroad every year, where working conditions are better and incomes higher. Those staying in the UK report a mbadive increase in the number of stress-related illnesses: the number of patients with hypertension, heart problems, insomnia and anxiety has grown significantly in recent years.

At the same time, Conservative governments have decided to cut taxes in recent years for the benefit of the rich and businesses in particular.

The current draft budget hardly shows that the government's austerity program is coming to an end. With the exception of the NHS, virtually all authorities are waiting for a new round of neutrality. Some of the planned measures literally work as a limitation of damage. So, 420 million pounds should go into repairing potholes. In the underfunded education system, each secondary school should receive a one-time payment of £ 50,000. "I think it's a good idea," Hammond said on television. Most of the reductions planned to date must be implemented without change.

"Budget promises broken"

As a result, the opposition strongly criticized the government's draft budget. Jeremy Corbyn, leader of the Labor Party, said Hammond had presented "a budget of broken promises". "What we have heard today are half-measures and short-term solutions as austerity progresses," Corbyn said. He called the tax cuts "ideological" because they would benefit above all from high incomes.

The Resolution Foundation think tank also concludes that nearly half of the relief will go to the ten percent of the richest households. At the same time, however, most of the planned reductions in social protection measures will continue. Households fifth down will lose 400 pounds a year, according to the think tank. The fifth of the richest households will save on average £ 390 a year thanks to the announced tax breaks.

Some believe that the government wants above all to satisfy middle-clbad voters who flocked to the Labor Party in the legislative elections last year.

DUP threatens – and gets a cash gift

It is striking that over the next few years, an additional 670 million pounds will be transferred from London to Northern Ireland. The Mays government is in the House of Commons on the votes of the ten MPPs of the DUP, a pro-British radical regional party in Northern Ireland. Their MPs recently openly threatened to vote against the draft budget in protest against some of the May Brexit plans. The announcement of this gift seems to have worked: the DUP withdrew its threat soon after the presentation of the draft budget.

Message to May's critics

With regard to Brexit, Chancellor Hammond said that if negotiations with the EU were successful, he could "free some of the reserves I currently have". That may have been a message to the Mays party critics: if the prime minister is elected, there are more tax breaks that you can sell to your constituents if successful.