Thursday 3 December 2015

SOURCE GUARDIAN: Osborne reliant on rising immigration levels to achieve budget surplus
During last week’s autumn statement, Osborne boasted: “The OBR’s (Office for Budget Responsibility)... forecast today is that the economy will grow robustly every year, living standards will rise every year, and more than a million extra jobs will be created over the next five years.” The chancellor made no reference to immigration in his statement. But analysis of figures from the OBR, the government’s independent forecasting body, shows that Britain’s finances would not be forecast to hit a budget surplus by 2019-20 without recent upward revisions to net migration numbers. As a result of the extra jobs and tax incomes, and changes to the composition of the UK’s working-age population, generated by the influx, the OBR has revised up the level of potential economic output for the UK by 0.9%. Under the OBR’s calculations, if projected net migration had remained unchanged at 105,000 a year, the boost to output would have been negligible. Without the additional output generated by those changed migration forecasts, the projected budget surplus would drop to zero and the only feasible way to achieve one by 2020 would have been through additional spending cuts or tax rises. Furthermore, based on OBR data and the evidence available, it is highly likely that the government’s intention of reducing net migration to the “tens of thousands” is directly at odds with its fiscal target. The OBR’s latest fiscal sustainability report, published in June, stated that net inward migration in line with the Office for National Statistics (ONS) high migration scenario of 225,000 a year would reduce the primary budget deficit by 0.5% of GDP and net debt by 17% of GDP by 2064-65, relative to the OBR’s central projection. In the low migration scenario (105,000 a year), the primary budget deficit would increase by 0.5% of GDP and net debt by 20% of GDP by 2064-65. The OBR’s outlook also shows the 1.1m increase in employment cited by Osborne is mostly because of upward revisions to net migration, which is predominantly concentrated among people of working age: this boosts the employment rate, GDP, potential output and tax receipts. Figures released last week by the ONS show that annualised net migration to Britain hit a new high of 336,000 in June, indicating that further revisions to the OBR’s projections may be in store.

SOURCE FINANCIAL TIMES: Autumn Statement - Osborne accused of resorting to stealth taxes on big businesses, wealthy property owners and council taxpayers
The decision to raise £11.6bn from an apprenticeship levy on businesses came under immediate fire from some tax professionals, who suggested it was at odds with the government’s “triple lock” ban on increasing any of the three main taxes. The levy requires employers to pay an additional 0.5 per cent on their employment costs to fund apprenticeships, which makes it very similar to a rise in employers’ national insurance contributions. Other big increases related to council tax, fuel duty, stamp duty, capital gains tax, corporation tax and pensions tax relief. Council taxpayers will pay an extra £6.2bn by 2021 after the chancellor announced that some local authorities would be allowed to raise council tax faster than previously assumed to meet some of the costs of social care and policing. One of the biggest increases was £3.8bn of higher stamp duty on buy-to-let property and second homes. Another £1.2bn will be raised from property owners by bringing forward payments of capital gains tax on residential property to within 30 days of completion.


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