UK General Election Forecast 2015 - Cameron Tory Tax Cut Fact Check
ElectionOracle / UK General Election Oct 06, 2014 - 06:58 AM GMTBy: Nadeem_Walayat
The big election bribe news out of the recent party conferences was David Cameron's promise / voter bribe to substantially raise both the starting and higher rate tax bands that the mainstream media uniformly costed at £7 billion to be added to Britain’s black hole (budget deficit of £95 billion per year).
I can tell you now that a future Conservative Government will raise the tax-free personal allowance from £10,500 to £12,500.
That will take 1 million more of the lowest paid workers out of income tax – and will give a tax cut to 30 million more.
So with us, if you work 30 hours a week on minimum wage, you will pay no income tax at all. Nothing. Zero. Zilch.
The 40p tax rate was only supposed to be paid by the most well-off people in our country...
...but in the past couple of decades, far too many have been dragged into it: teachers, police officers.
So let me tell you this today.
I want to take action that’s long overdue, and bring back some fairness to tax.
With a Conservative government, we will raise the threshold at which people pay the 40p rate.
It’s currently £41,900…
…in the next Parliament we will raise it to £50,000.
So here’s our commitment to the British people:
No income tax if you are on Minimum Wage.
A 12 and a half thousand pound tax-free personal allowance for millions of hard-working people.
And you only pay 40p tax when you earn £50,000.
The specifics of David Cameron's promise / voter bribe are -
1. To raise the minimum starting rate of tax from the current £10k to £12.5k.
2. To raise the 40% tax band from £41,865 to £50,000.
3. That these are to be achieved by the end of the next parliament.
Tax Cut Fact Check.
The key point is that the tax cuts are expected to be implemented by the END of the next parliament, that's 5 YEARS from May 2015 or May 2020. So that is 6 YEARS of indexation for inflation to apply against the proposed tax cuts which at an average probable inflation rate of 2.5% would convert into an indexation of 16% which means -
1. Starting Rate of Tax
That by 2020 the tax band would already be set to rise to approx £11,517, therefore the actual tax band increase would be nearer £903 rather than the £2,500 that propaganda suggests which at 20% would translate into a tax cut of £160 per year (by 2020) rather than the £500 implied.
2. 40% Tax Band
That by 2020 the 40% tax band would already be set to rise from £41,865 to approx £48,591, therefore the actual tax band increase would be nearer to £1400 than the £8,100 propaganda suggests which at 40% would translate into a tax cut of £563 per year (by 2020) rather than £3,240 implied.
The net effect of these much smaller than publicised actual tax cuts would be an extra cost of just £1.2 billion per year rather than the £7 billion that the mainstream press is regurgitating at length which begs the question why are journalists so dumb ? Why run around like headless chickens without checking the facts!
UK General Election Forecast
My long-standing forecast for the outcome of the next general election is as excerpted below -
30 Dec 2013 - UK House Prices Forecast 2014 to 2018, Inflation, Trend Trajectory and General Election 2015
In conclusion a May 2015 general election at an average house price inflation rate of 8.5% would result in a Conservative overall majority of at least 30 seats. Therefore this is my minimum expectation as I expect UK house prices to start to average 10% per annum from early 2014 with my actual forecast converging towards average UK house prices breaking to a new all time high just prior to the May 2015 general election which would be a significant boost for housing market sentiment and thus the Conservatives election prospects.
The recently updated election forecast graph shows that contrary to recent opinion polls (ComRes, ICM, Ipsos MORI and YouGov weighted average) that erroneously put the Labour party ahead of the Tories on 36% for Labour against 31% for Conservative, instead the Tories have already achieved mission accomplished and barring a house prices crash are heading for an outright election victory, never mind the prospects for another Coalition government which now appear to be extremely improbable.
Source and Comments: http://www.marketoracle.co.uk/Article47618.html
By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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