As we go into the New Year
The New Year should be a time of hope and represent an opportunity to start afresh, but for many of us this New Year celebration will be overshadowed by concerns over the economic outlook. With the increase in VAT from 17.5 per cent to 20 per cent effective from 4th January 2011, implementation of the additional tax rate above the higher rate limit (50 per cent), capping of benefits and changes to the child benefit scheme, many of us will find it harder to make ends meet in the coming year.
The current, historically high, level of public borrowing has required the Government to make tough choices about how taxpayers’ money is allocated. Particular focus has been given to decreasing welfare costs, cut wasteful spending and reducing immigration to sustainable levels. Tackling the deficit now means that we are getting our economy back on track faster. It would be irresponsible and unfair to continue to accumulate debts to fund spending that benefit today’s generation at the expense of tomorrow’s.
In addition to the actions put in place to decrease our deficit, measures have been introduced to relieve the pressure on people’s personal economy, such as keeping long term interest rates down to guarantee lower costs on loans and mortgages and raising the income tax threshold gradually to £10,000 over the next five years. The increased tax threshold will result in millions of people no longer having to pay income tax and as no one will have to pay tax on the first £10,000 they earn, the overall tax rate will in effect decrease for most people.
The economic prospects for 2011 are worrisome for many and my hope is that this anxiety will diminish as we steadily get the economy back on its feet. The Coalition Government are acting now, making difficult decisions, so that we can ensure a brighter economic future for our children and grandchildren.