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admin 29.11.2014

In these frequent observations, we look at aspects of topical issues related to our research programme.
As in the last parliament, grants to councils are set to be cut substantially over the next 4 years.
But councils also have other sources of revenue: they retain a portion of business rates revenues and levy and retain council tax, and taken together these are a much bigger source of revenue than grants from DCLG. Looking at how much councils will have to spend in total, including these additional sources of revenue, the cuts will be around 7% in real terms over the next four years. But this pattern is set to change because of a change in the way DCLG allocates cuts to grants across councils.
This means, looking ahead over the next 4 years, cuts to spending power will be much more evenly distributed across councils than they were over the last parliament – as shown in Figure 2. Over the last few years, councils wanting to raise council tax by more than 2% have had to call a referendum.
The full localisation of business rates will also represent a significant transfer of additional money to councils and the government will be asking councils to take on additional responsibilities in return for this extra money. Yesterday’s announcements are, therefore, just part of some genuinely revolutionary changes that are taking place to local government finance. Most European countries experienced a significant increase in government borrowing in the wake of the global financial crisis and Great Recession. Compared with usual cross-country macroeconomic assessments of public finances (for example, by the IMF or the OECD), this special issue relies heavily on the use of micro data and detailed microsimulation models and hence presents a deeper analysis that aims at enhanced comparability between these countries.
In the years preceding the financial crisis, Ireland and Spain appeared to have the healthiest fiscal positions out of these six countries – having run overall budget surpluses for at least the preceding three years. Although suffering a little less severely, France, Italy and the UK also saw their underlying public finances weaken – each by just over 5 per cent of GDP. In many ways different countries have taken very different approaches to dealing with the fiscal problems they faced. In contrast, the UK has relied heavily on cuts to public spending, rather than net tax rises.
Although each country has relied to rather differing degrees on tax raising measures, the nature of the tax increases implemented across the countries shows some interesting similarities.
The countries have, however, made rather different choices about which areas of spending to cut.
Countries have also made different choices about which households should bear the brunt of the consolidation measures implemented so far. With France, Ireland, Italy, Spain and the UK all having planned and implemented large fiscal adjustments since the onset of the Great Recession, we might hope that policymakers would have tried to use this as an opportunity to improve the efficiency of the tax system and public spending in their countries. In France, while the new corporate tax credit (which is computed on individual earnings of firms’ employees) is welcome, it would have been better to have simply reduced the relatively high level of employer social security contributions. In Ireland, reforms have unnecessarily created uncertainty and distortions: there has been a succession of VAT changes (increases, reductions and then increases again), while the rate of capital gains tax has since October 2008 been increased from 20 per cent to 22 per cent, then to 25 per cent, then to 30 per cent and then to 33 per cent.
In the UK, given a relatively narrow VAT base, the increase in the main rate of VAT will have come at the cost of increasing distortions for both producers and consumers; the income tax schedule has also been made considerably more complicated. With many countries still running deficits in excess of 2 per cent of national income and having a stock of government debt well above its pre-crisis level, this will not be the end of the story. The Scotland Bill, currently making its way through the Houses of Parliament, will transfer a range of tax and spending powers from Westminster to the Scottish Parliament. It also finds that the precise way in which the BGAs are indexed over time could mean differences of over a billion pounds a year in the Scottish Government’s budget.
The Smith Commission committed to retain the Barnett Formula as the mechanism for determining Scotland’s block grant. In the first year that new powers are devolved, this adjustment should be relatively straightforward, at least in principle.
In future years however, the process of adjusting the Barnett-derived grant becomes more complicated.
When the additional rUK revenues are spent on services like health or education that are devolved to Scotland, Scotland gets an equivalent population share of this spending via the Barnett Formula. In contrast, under the ID or PCID approaches, Scotland would gain from such a tax increase. Consider the following situation: revenues start off lower per person in Scotland, grow at the same percentage rate per person as in rUK, but the population grows less quickly than in rUK. Under the PCID approach, the BGA increases in line with the rate of growth in revenues per person, which is the same in Scotland and rUK. On the other hand, Scotland does lose out somewhat under the ID approach because of its lower population growth.
Our analysis also shows that eventually though, if relative population decline continues, Scotland would start to do less well under the ID method than the LD method. Calculating the knock-on effects would therefore require a series of assumptions, each subject to significant uncertainty, opening up the potential for frequent disagreement between the governments. Just how the block grant will be adjusted following the devolution of tax and welfare powers to Scotland is currently being negotiated by the UK Treasury and Scottish Government.
For these reasons, the options available for calculating the BGAs, and other elements of the fiscal framework, should be part of the public and parliamentary debate, as much as the tax and welfare powers set out in the Scotland Bill itself have been. Indeed it may now be time for a more fundamental reassessment of how the devolved governments are financed: including whether the Barnett Formula should be retained. David Bell and David Eiser are at the University of Stirling and the Centre for Constitutional Change. The good news for Mr Osborne is that the UK’s economic situation and outlook does not seem to have deteriorated since the last official forecasts were published in July.
Despite this, figures released today by the Office for National Statistics suggest the Chancellor may be on course to slightly overshoot his forecast for borrowing this year. As the table shows, October 2015 was a relatively bad month for receipts, with the main taxes (income tax, National Insurance Contributions, VAT and corporation tax) all performing worse than the full year forecast.
However, in the context of public borrowing, the size of overshoot suggested by today’s figures is relatively small. The July Budget suggested that George Osborne will be looking to cut departmental day-to-day spending by around 5% in real terms over the next four years.
But of course the pain is unlikely to be evenly shared and from the start the Treasury asked departments to propose how they would cut 25% and 40% from their day-to-day budgets. Whereas George Osborne always expected to have to make these tough choices about how to divide up the shrinking departmental spending pie, he probably was not expecting to have to revisit difficult decisions on welfare spending. Our report focuses on the effects on work incentives of changes proposed in the July Budget. But within this overall picture, the effect of the tax credit changes on work incentives will be different for different groups.
The full report is available here, a companion report funded by the Welsh Government examining the impact of the reforms in Wales is available here.
The factors driving the strengthening of work incentives include increases in the income tax personal allowance and higher rate threshold and cuts to benefits for workless families, which increase in-work incomes but reduce out-of-work incomes for many people who are not entitled to tax credits when in paid work. For around 6.7 million people the cut to in-work tax credits is greater than the cut to out-of-work benefits, weakening their incentive to be in paid work. However, reducing the amount of support given to single-earner couples through the tax credit system will strengthen the incentive for both members of a couple to work rather than just one, as they will have less support to lose if the second person starts paid work. As well as cutting the tax credits working families receive next year, the July Budget also proposed to reduce the amount of support universal credit will give to working families. The proposed tax and benefit changes also on average strengthen the incentive for those in paid work to increase their earnings. However, around 2.1 million workers who remain entitled to tax credits will see their incentives to increase their earnings weakened as a result of a rise in the rate at which tax credits are withdrawn as income rises. However, the effect of the NLW is smaller for those who have the weakest incentive to increase their earnings in the first place, as much of the higher wages will be lost in lower benefit and tax credit entitlement. Police forces have borne significant spending cuts arising from the government’s recent austerity programme.
Police forces in England and Wales are financed from two main sources: grants from central government and a component added to local council tax called the police precept. There are important differences between police forces in how they fared during the period of growth in funding and the period of cuts that followed.
The forces that saw the biggest increases in police spending over the 2000s were those that increased revenues from the precept by the most. Why some forces increased precept revenues over the 2000s by so much more than others remains an important question. All ethnic minority groups in England are now, on average, more likely to go to university than their White British peers.
These differences also vary by socio-economic background, and in some cases are very large indeed. These are amongst the findings of research undertaken by IFS researchers, funded by the Departments of Education and Business, Innovation and Skills (BIS), and published by BIS.
The report updates evidence on differences in higher education participation by socio-economic background, gender and ethnicity.
The research used census data linking all pupils going to school in England to all students going to university in the UK, containing over half a million pupils per cohort.
Differences in how well pupils do at school can help to explain some but not all of these gaps.
Even so, we still found, for example, that 34% of Chinese pupils attend one of these selective institutions, higher than the proportion of White British students who go to any university, and more than three times higher than the proportion of White British students going to a selective institution. These results do not necessarily contradict recent evidence suggesting that ethnic minorities are less likely to receive offers from selective institutions than their equivalently qualified White British counterparts. This research has shown that university participation rates amongst ethnic minority groups are very high on average – much higher than for their White British counterparts. The overall funding settlement for schools will feel quite different over the next five years compared with the previous five.
The new Conservative government has also offered schools in England considerable protection, committing to protecting day-to-day spending per pupil in cash terms over the current parliament. Our research at the Institute for Fiscal Studies (IFS), funded by the Nuffield Foundation, shows that key cost increases include the average public sector pay settlement of 1% per year announced in the Summer Budget. Even so, this will be the first time since the mid-1990s that school spending has fallen in real terms (when spending per pupil fell by 3.6% in real terms between 1993 and 1997). A significant challenge on the teacher workforce over the next five years will be recruiting the required number of teachers, and of sufficient quality and motivation, at a time of continued public pay restraint and rising pupil numbers. The government has also signalled its intention to reform the school funding system to ensure (sensibly) that areas with similar populations receive the same level of funding per pupil. Schools in England experienced a relatively benign scenario under the last parliament at least relative to many other public services. This Observation comes from an article published in a special edition of Fiscal Studies, based on IFS analysis for the 2015 general election.
By any standards, the fiscal task facing the Conservative–Liberal-Democrat coalition government when it assumed office in May 2010 was a remarkable one.
The deficit reduction achieved over the parliament was still sizeable, however, and required some very substantial spending cuts as well as some net tax increases.
As Helen Miller and Thomas Pope in this Special Issue show in some detail, the coalition enacted a series of changes to corporation tax, with the explicit, and fulfilled, aim of increasing the competitiveness of the UK corporate tax system. Stuart Adam and Barra Roantree explore the coalition government’s policies on non-corporate taxes and argue that only in the taxation of pensions and savings were there important structural changes. These changes to the tax system were implemented alongside cuts to social security benefits. Stuart Adam, James Browne and William Elming in this Special Issue provide a detailed analysis of the distributional consequences of the tax and benefit policies implemented by the coalition. Changes in the labour market were, in fact, more important determinants of the overall path of living standards for most than were tax and benefit changes. The newly-elected Conservative government has entered office with a deficit of 5 per cent of national income and a commitment to substantial additional spending cuts. It is this concentration of spending cuts in particular areas, rather than the overall level of cuts to total public spending, which is most important. Looking further forward, the continued ageing of the UK population will put increased pressures on spending. The future challenges are not just about reducing spending or increasing taxes though, but also about reforming public services and the tax and benefit system and making choices about the distributional consequences of any changes. Between 2010 and 2015, cuts in welfare spending were accompanied by some very sharp tax increases for the richest, but also by a package of tax measures that ensured that those in the middle to upper-middle parts of the income distribution were protected. Going forward, the Conservative government is committed to reducing the coherence of pension taxation even further by tapering away tax relief for higher earners, thereby introducing a very high effective marginal income tax rate for some. The need for more coherent tax reform is becoming urgent, and none of these proposals moves in an appropriate direction.
Having failed to implement substantive structural reform, the coalition has left its successor with numerous challenges to address the long-standing weaknesses in the tax system identified by [the Mirrlees Review[13]] – some of which (such as increasingly unsustainable council tax valuations and ill-targeted fuel duties) are becoming ever more pressing. Taken together, the amount councils receive in Revenue Support Grant (RSG) and other grants from DCLG are set to fall by 60%.
And these revenue sources are expected to grow over the next four years, not least because councils are expected to raise council tax fairly significantly. It now explicitly takes into account the differing extent to which councils rely on grants, making smaller cuts to the grants of those which rely a lot on the grant than to those councils which are able to raise more of their own revenue from council tax.

Looking to the next four years, spending on adult social care is likely to be particularly protected, because some of the grant to authorities is being ring-fenced for this purpose and because councils are being given the ability to raise council tax by an additional 2% a year specifically to fund adult social care. None have done so (although Bedfordshire police tried and failed to win such a referendum on the local police precept).
However, it is important to note this will follow a 5-year period when most councils have been freezing their council tax, leaving the average council tax bill a little lower in real-terms in 2019 than in 2010. The government will soon begin consulting on how to fully devolve business rates revenues to councils. Ireland and Spain are well-known for the severe difficulties they faced but France, Italy and the UK also saw borrowing rise sharply. In other words, had they taken no policy action, they would have ended up borrowing over 5 per cent of GDP more every year forevermore. As the figure shows, France and Italy have both relied relatively heavily on raising taxes, rather than cutting spending, to reduce borrowing. Up to the end of 2014–15, 82% of fiscal measures in the UK were spending cuts, rather than net tax rises.
France, Ireland, Italy, Spain and the UK all chose to increase VAT rates and to increase social insurance contributions. France, Italy and Spain refrained from cutting welfare benefits (and, in fact, increased them for some groups), in stark contrast to Ireland and the UK where cuts to benefit payments for working age adults played a major role in delivering fiscal consolidation. In Italy households with children have lost less from tax and benefit reforms than pensioner households; the reverse is true in Ireland and the UK.
At the same time, an adjustment will have to be made to Scotland’s block grant funding from Westminster. The report of the Smith Commission, on which the Bill is based, did not have the time to design the fiscal framework. And it concludes by suggesting the time may now have come for a more fundamental reassessment of devolved finance – including the Barnett Formula. In what follows, we focus on tax devolution but many of the same issues arise for welfare devolution. But Scotland’s Barnett-determined block grant will clearly need to be adjusted to reflect both the new tax-raising powers and new expenditure responsibilities being devolved. The initial reduction in the block grant for devolved taxes should be equivalent to the revenue forgone by the UK government. This indexes the change in the BGA to the percentage change in total comparable tax revenues in the rest of the UK (rUK). This indexes the BGA per capita to the percentage change in comparable rUK revenues per person. This calculates the change in the BGA as a population share of the change in comparable revenues in rUK. Changes in UK tax rates for taxes that are devolved are likely to lead to a change in spending by the UK government.
Hence Scottish revenues grow at the same rate as the BGA – meaning it does no better or no worse than if taxes were not devolved. And, under the LD approach it loses out even more, at least initially, because a given rate of growth in its revenues translates into less than a population-based share of the equivalent growth in rUK revenues (because rUK revenues started off higher per person). Indeed, because the ID method never gets updated to reflect the fall in Scotland’s relative population, it can eventually imply a negative budget for Scotland if one looks far enough in the future. While this seems eminently reasonable in theory, we have significant concerns about its workability in practice.
These discussions are taking place behind closed doors with little information publically available about the options being considered and the effects of these options.
Reform of Barnett may remove some of the conflicts between the Smith Commission’s principles.
Average independent forecasts for GDP growth this year and next are identical now to what they were in July. Some aspects of spending, such as that on investment, are quite lumpy and may well grow less quickly over the remainder of the year than they have done so far.
Taking the first seven months of the year together, income tax, National Insurance Contributions, VAT and corporation tax have all still grown strongly relative to the full year forecast, but the slowdown in their growth over the last month means they are no longer offsetting weaker growth in other receipts. Together with the fact that the economic outlook appears little changed since July, this suggests that there are unlikely to be large revisions to the OBR’s economic and fiscal forecasts next week. Recent weeks have witnessed a series of announcements about early settlements for certain government departments (although without the actual settlements being published), including the Departments for Transport, Work and Pensions, Environment, Food and Rural Affairs and Energy and Climate Change. However, the recent vote in the House of Lords (which forced George Osborne to reconsider his planned cuts to tax credits) may have resulted in just that.
The first is for him to find some alternative cuts to other spending within the welfare cap. For example, the tax credit changes will weaken incentives for lone parents to move into work but strengthen the incentive for both members of a couple to work rather than just one. These changes will on average weaken incentives for lone parents and those in couples whose partner does not work. 8.6 million people with a working partner will see their work incentives strengthened by planned changes to the (pre-universal credit) benefit system.
This predominantly arises because the cuts to tax credits mean that fewer workers will be entitled to any means-tested benefit or tax credits, so that they no longer face withdrawal of means-tested benefits if they increase their earnings. This will also strengthen the work incentives of those who potentially benefit from its introduction. This article summarises the main findings of a new Briefing Note from the Institute for Fiscal Studies on government funding of the police since the turn of the millennium. The coalition government applied the same percentage cut to grants to all police forces each year. It could be that the formula central government used to allocate grants to police forces did not adequately reflect their relative needs, and so forces with greater needs needed to raise more from the precept. This is the case even amongst groups who were previously under-represented in higher education, such as those of Black Caribbean ethnic origin, a relatively recent change. For example, Chinese pupils in the lowest socio-economic quintile group are, on average, more than 10 percentage points more likely to go to university than White British pupils in the highest socio-economic quintile group. It focused on those taking their GCSEs in 2007-08, who could have gone to university at age 18 in 2010-11 or age 19 in 2011-12.
We find that school pupils from all ethnic minority backgrounds are now, on average, significantly more likely to go to university than their White British counterparts. The light grey bars on the right show the overall participation rates by ethnic group and the black horizontal line plots the White British average.
For example, pupils of Black, Pakistani and Bangladeshi ethnic origin tend to perform worse, on average, in national tests and exams taken at school than their White British counterparts. Most ethnic minority groups are, on average, more likely to attend such institutions than their White British counterparts, but the differences are smaller than for participation among all universities, and could generally be better explained by differences in school attainment. Only a small proportion of this relative over-performance can be explained by differences in how well pupils perform earlier in the school system. As shown in the figure below, this will actually mean a similar rate of growth in nominal spending as seen in the last parliament.
In addition schools will see an increased employer National Insurance Contributions bill from April 2016 as the reduced rate associated with contracting out will cease. This is actually a less severe squeeze than looked likely at the time of the election (when we thought it would be around a 12% cut per pupil). If there was a desire to keep the pupil:teacher ratio constant, the number of teachers would need to increase by 30,000 (from 450,000 today to 480,000 by 2020).
Although it made some tweaks at the end of the last parliament, this only went some way to address the problem that similar areas can receive quite different levels of funding per pupil. Further education and sixth form spending fell by 14% in real terms under the last parliament and could experience even larger cuts under this parliament. The articles in this special issue are currently available free of charge in the Wiley online library. The UK had just experienced its deepest recession in almost a century and the deficit was at its highest point since the Second World War, at just over 10 per cent of national income. Dashed lines indicate the plans of the incoming Conservative government in 2015 based on its manifesto commitments. They show how local authorities to some extent mirrored the behaviour of central government in protecting some areas of spending at the expense of others. Other changes to the tax system have been fiscally and distributionally significant, but none has resulted in real structural change or improvement, with most focusing on changing rates and thresholds. Broadly speaking, they show that the overall effect of these changes was to take money from those with the highest incomes, and those dependent on benefits in the bottom half of the distribution, whilst largely protecting those in the middle and upper-middle parts of the income distribution. If implemented, they will take public spending as a fraction of national income back to the level it was at the end of the 1990s, and close to its lowest level since the Second World War. The Conservative government has pledged a £12 billion, or roughly 10 per cent, reduction in spending on (non-pension) social security benefits. For example, the National Health Service faces increasing demand from the growing and ageing population, and cost pressures from wages and high-cost drugs. It is also, bizarrely, committed to legislating to prevent itself from raising rates of income tax, National Insurance and VAT as well as to introducing tax breaks for owner-occupied housing into the inheritance tax system. A number of recent changes have also introduced anomalies into the structure of income tax[12] and, as Adam and Roantree in this Special Issue note, there are now several important thresholds in the income tax system that are fixed in nominal terms.
I know it is, because I have been nauseated since listening to the president's summit last Thursday.If nothing else in this never-ending suffocation of American health care has been clear, the sham was transparent enough. Cuts over the next four years, though, will be front loaded, with cuts of around 4% to 5% next year, on average. In the last few years, DCLG effectively cut every council’s grant by the same percentage. In particular, the forecast growth in council tax rates and revenues will do less to offset cuts to grants in areas with small council tax revenues and a high degree of grant reliance than it does in areas with large council tax revenues and a low degree of grant reliance. By the end of 2014, two-thirds of the measures implemented in France were aimed at boosting revenue and one-third aimed at reducing spending. The result is that the UK is on course to have a lower level of spending, a similar level of taxation, and a lower level of borrowing than was the case pre-crisis.
France, Spain and the UK also all implemented income tax rises that were focussed on the highest income individuals, while France the UK both chose to reduce corporation tax rates while widening the base for this tax. France and the UK have both chosen to afford relative protection to spending on health and education, while Italy and Spain have chosen to cut these services more deeply than other service areas. Unfortunately, in many cases, the fiscal response to the crisis missed opportunities to improve the overall efficiency of the tax system. However, the lesson from the reforms made so far is that we perhaps ought not to be too optimistic on this front and instead may have to be content to settle for reforms that do not add to existing deficiencies. If the BGAs were not indexed but fixed at the year 1 amount, then, in the face of inflation and economic growth their relative value would be eroded over time. A percentage increase in the BGA is therefore smaller than a population-share based increase. Depending on the initial starting levels of revenues per person, revenue growth per person and population growth, the different options we consider can have markedly different effects on the Scottish Government’s budget. Indeed, if too much attention is paid to compensating for every example of knock-on effect, then the arguments and tricky negotiations that result could cause the whole system to become unworkable and unsustainable. The Smith Commission parked these issues to one side by stating that the Barnett Formula should be retained. If achieved this would be the first overall annual surplus for the UK public finances since 2000–01 and only the ninth since Queen Elizabeth II came to the throne.
As a result, the unprotected areas (after taking account of the Barnett formula, which is usually used to determine grants to the devolved administrations) are set to see real terms cuts to their day-to-day spending averaging 27%, as we described in a recent IFS briefing note.
And for those looking to work more, although the tax credit changes will increase by a million the number of workers who get to keep at least 40p of every extra pound earned they will also increase by half a million the numbers keeping less than 20p of each extra pound earned. Generally, cuts to benefit spending would tend to strengthen work incentives as people will see bigger increases in income if they move into work or work more hours. So relative to the tax credit system currently planned for 2019–20, universal credit will increase the amount of support given to single-earner couples, particularly those with children.
Indeed, for this group the introduction of the NLW will do more to strengthen work incentives than tax and benefit changes will.
The cuts that followed have been driven by cuts to central government grants – which fell by a fifth.
However, because some forces are much more reliant on grant funding than others, the cuts to spending power varied substantially across forces. This is because the forces most reliant on grant funding in 2010–11 were also those that increased their precept revenues least over the 2000s. Or it could be that people in some areas have preferences for higher spending on the police, making it easier for these forces to raise revenue locally. By contrast, White British pupils in the lowest socio-economic quintile group have participation rates that are more than 10 percentage points lower than those observed for any other ethnic group. That is, the proportion of students from an ethnic minority background getting a place at a UK university is higher than the proportion of White British students getting a place. Accounting for the fact that individuals from these ethnic groups have lower prior attainment than their peers therefore increases the unexplained differences in participation between ethnic minorities and White British pupils. If ethnic minorities are even more likely to apply to university than their White British counterparts, then it would be possible for them to be offered proportionately fewer places on average than White British students, but still go on to be relatively more likely to attend.

This means that there must be other factors that are more common amongst ethnic minority families than amongst White British families which are positively associated with university participation.
Even after allowing for the growth in pupil numbers over this period, spending per pupil still rose by 0.6% in real terms.
This comes on top of the increase in employer pension contributions to the teachers’ pension scheme that came into force in April 2015. Although not without precedent (a similar increase occurred in the early 2000s), it could prove difficult to increase teacher numbers at a time when public sector pay seems likely to fall relative to that in the private sector. We forecast they will see an overall cut of 8% per pupil in real terms over the next five years. The Conservative part of the coalition had been elected on a platform of quite aggressive deficit reduction, which would require historically unprecedented spending cuts alongside at least some tax rises.
So even if the net effect of tax changes was relatively modest, there was considerable policy activism. However, different groups have been differentially affected by these changes, with increases for pensioners more than compensated for by reductions in the generosity of working-age benefits. However, borrowing an additional 5 per cent of national income each year is not really an option, as the OBR illustrates that this would push public sector net debt onto an unsustainable increasing trajectory.
The service therefore faces a considerable productivity challenge in order to ensure that service levels or quality do not fall, despite the real increase in funding that has been proposed over the next parliament.[9] Other challenges include issues ranging from the allocation of resources and use of consistent formulae, as with school and local authority spending,[10] to the extent and design of private co-payments in areas such as higher education and social care.
Structural reforms, such as the introduction of universal credit, might improve efficiency and will have more complex distributional effects. The biggest reforms affected the taxation of pensions and savings, but even here many of the pension tax changes reduced the coherence of the tax system. As for the big structural problems in the tax system, no attempt has been made to integrate income tax with National Insurance contributions, with the latter acting simply as a second tax on earnings.
The cuts will also be more evenly spread, rather than hitting poorer authorities harder as happened between 2010 and 2015.
In other words, it is the fact that the poorer, more grant-dependent areas can do less to increase their budgets by increasing their council tax that means they will still fair a little worse over the next few years than leafier, less grant-dependent places. This could mean difficult choices for other services like children’s social services, refuse collection, libraries, transport, economic development, planning and housing, some of which have already seen very large cuts. A key thing still to be decided is just how much divergence between the revenues of different areas should be allowed before safety net systems kick in.
Both France and Italy on course to become higher tax, higher spending and high borrowing countries than they were before the crisis hit. In the case of tax BGAs, this would result in the Scottish Government gaining and the UK government losing out as time goes by. But equally the Scottish budget would not benefit from revenue increases that resulted from population growth. The rationale for the LD approach is that, by being based on a population share of a cash terms change in revenue, it is symmetric with the spending side of the Barnett Formula (which calculates the change to Scotland’s block grant as a population share of the cash terms change in English spending). So the increase in the BGA exactly offsets the increase in the underlying block grant, leaving Scotland unaffected.
But it illustrates that the ID method would not represent a sustainable long-term compromise between the PCID and LD methods that, in the short term, would be most beneficial to the Scottish Government and UK Treasury, respectively.
It also shows that the principles set out by the Smith Commission, against which the negotiated framework will likely be judged, cannot be met in full.
Some of these departments have already seen very significant cuts to their budgets over the last five years.
Such cuts would presumably be ones that were considered but rejected in favour of the tax credit cuts in July. Even the very low inflation in September (which is usually used to uprate many benefits in the following April) will not have made much difference this year as zero inflation was already anticipated in the July Budget, (and the government has announced a cash freeze in working age benefits in any case). This will strengthen the incentive for one member of a couple to work (rather than none) but weaken the incentive for both members of a couple to work rather than just one, as the additional support given to single-earner couples is withdrawn when the second member of the couple enters paid work.
By combining multiple overlapping benefit tapers into a single one, universal credit will remove the worst incentives that exist in the current system where people face withdrawal of multiple benefits over the same range of income. Understanding these different motivations is particularly crucial for the Home Office at the moment, given it is seeking to reform how central government grant funding is allocated between forces in future. In other words, comparing pupils with similar school attainment but from different ethnic backgrounds actually makes it more difficult to explain why ethnic minorities are so much more likely to go to university than their White British peers. Moreover, we find that these other factors appear to be more important for ethnic minorities for whom English is an additional language and for those living in London. That will ease the pressure on schools costs, but might make recruitment and retention of teachers and other staff more difficult.
Alternatively, schools and policymakers could allow the pupil:teacher ratio to rise, implying potentially larger class sizes.
In the event, the coalition agreement largely accepted the Conservative plans to reach structural current budget balance by the end of the parliament.
In the absence of the fiscal consolidation, public spending would have remained around 45 per cent of national income. Sibieta describes these reforms and explores the implications for the distribution of school funding, showing in particular how funding became more focused on schools with the poorest intakes. The authors also show how, by contrast with what happened to school funding, it was local authorities with the greatest needs, which had been most reliant on central government funding, that experienced the sharpest cuts in spending. That policy activism, however, led to relatively little in the way of substantive reform other than in the taxation of profits through corporation tax and in the taxation of savings. Even leaving aside the implementation of these planned reforms, numerous challenges still remain. With the additional ability to increase council tax to pay for social care, the average council tax bill for a band D property could rise by £205 a year by April 2019 if these powers are used in full, with the potential for further rises to pay for police and fire authorities. Other councils like districts and the Greater London Authority will still only be able to raise rates by 2% a year without a referendum. And police authorities and fire authorities also levy council tax precepts – increases in either of these would push council tax bills up further.
One common theme, unfortunately, is that these fiscal responses to the crisis largely missed opportunities to improve the overall efficiency of the tax system. Under this adjustment method, growth in either of these sources of revenue in rUK would lead to an increase in Scotland’s BGA (a fall in its block grant).
For example, the Ministry of Justice has already had its day-to-day budget cut by a third since 2010–11. As a result, universal credit will reduce the number of people who get to keep less than 20p of each additional pound they earn by 1.3 million or nearly three-quarters. For example, Indian and Chinese pupils are, on average, more than twice as likely to go to university as their White British counterparts. They know, as every American instinctively knows, this bill is not affordable to the citizens of this country, and they also know that it will reduce the availability and quality of health care for the majority of citizens. This approach therefore exposes Scotland to the risk of relatively slower population growth than in rUK, assuming that increases in population will lead to higher tax revenues. The first is how to divide up the diminishing resources available for day-to-day departmental spending. It appears that, like spoiled children, these '60s leftovers care not about anything except their own power. On the other hand, this mechanism would allow Scotland to capture the reward of relatively faster population growth. The second is how to remain within his self-imposed welfare cap while also adhering to the recent House of Lords motion that requires him to reconsider the cuts to tax credits that were announced in July.
There are some existing policies that are proving difficult to implement, such as the new (tighter) eligibility criteria for disability benefits. If we allow one-sixth of our economy to be taken over by what has essentially become a handful of "government gangsters" (Michael Barrone's term, not mine) we are in serious trouble. Scotland would therefore gain from attracting and retaining more income tax payers, for instance. And there are some benefits on which spending continues to rise, despite cuts to generosity (for example, housing benefit, where increased spending is being driven by the growth of the private rental sector and the growth in private rents). The Constitution says, "We the People," and the people need to break the tyranny of those in office and take back our ever-dwindling ability to live in freedom.CYNDI WEBSTER  Whatever you call it, data were incorrectReader Glen Gifford (letter, Feb.
Move on to the important stuff.It's like a group who claims the sky is falling, using doctored data to "prove" it. Or in the case of global warming, government will force you to give it money, burden and tax industry with green regulation, and enjoy telling the rest of us what to do in perpetuity.As you read this, Democrats in Washington are planning a huge energy tax called cap-and-trade to "fight" climate change. The state Senate last week approved a 294-percent increase in the state cigarette tax, and unless the House or Gov.
Crist rejects the plan, it will punish the very taxpayers the stimulus package purported to save. A cigarette tax increase is a regressive tax hike on the state's low-income population during a devastating recession.
In some of the state's poorest counties, the cost of cigarettes will surpass 5 percent of household income. Cigarette tax increases also have detrimental effects on nonsmokers by damaging the larger economy. Raising the price of a pack of cigarettes higher than those found in bordering states promises to not only repel out-of-state consumers but drive Florida citizens over the state border, where prices are lower. Retailers are justifiably clamoring to defeat the tax hike, because they see sales evaporating as customers buy their cigarettes in Georgia and Alabama, where a carton will cost almost $10 less. The price advantage that Florida's retailers enjoyed will go up in smoke if this tax hike happens. Florida Senators are lauding the $1-per-pack hike as a victory for both balanced budgets and anti-smoking initiatives, but the reality is a cigarette tax increase cannot achieve both.
Any drop among in-state cigarette purchases goes hand-in-hand with a reduction in tax revenues, leaving another gaping budget hole in the future.
As growing numbers of Florida smokers buy their cigarettes somewhere else, revenue projections will not be met. In New Jersey, cigarette tax revenue actually declined after a tax hike there, with revenues falling 181 percent short of expectations. A study by the National Taxpayers Union found that, after 35 tobacco tax hikes between 2004 and 2006, 22 states followed up with other tax increases.For those of you keeping score at home, cigarette taxes are bad for smokers, nonsmokers, the poor, retailers, the government and anyone who cares about the state's economy. It appears the only people these tax hikes benefit are the misinformed, who will change their tune soon enough.The fact that any tax hikes are on the table is preposterous.
Florida expects to receive a $13 billion infusion from the federal government as part of President Obama's stimulus package. The reasons to oppose it are numerous, and with a $13 billion check in the mail, the excuses to embrace it are nonexistent. Additional Facts ABOUT THE AUTHOR   Josh Culling is state government affairs manager for the nonpartisan National Taxpayers Union, which has more than 24,000 members in Florida and works for lower taxes, smaller government and economic freedom.
But keeping people employed through government jobs at the taxpayers' expense will not stimulate the economy. Taxpayers are covering the cost now, and taxpayers have always paid for fire protection through their property taxes.In the 1960s, '70s, '80s and '90s, property taxes paid for local government without the fees we are faced with today. It appears that, like spoiled children, these '60s leftovers care not about anything except their own power. Florida expects to receive a $13 billion infusion from the federal government as part of President Obama's stimulus package.
But keeping people employed through government jobs at the taxpayers' expense will not stimulate the economy. If Nader hadn't drawn 90,000 Florida votes in 2000, the reasoning goes, a handful of his supporters might have closed their eyes, swallowed hard and voted for Al Gore — probably closing the 537-vote gap by which Bush carried the state. Once again, the Democrats will be the peace party while the Republicans defend their policies.
Charlie Crist's well-timed endorsement of McCain raised his running-mate ratings in the GOP. Bill Nelson, having won four times in a state with 27 electoral votes, should be on the short list of either Democrat.
They're affable and telegenic, but they have shown they can be tough, capable campaigners. On the other hand, gay-marriage proponents, who have pushed this issue in the courts and legislatures from Hawaii to Massachusetts, seem startled and offended when their cause runs into resistance. Well, Leon County has always had totally clean elections — zero defects in the recounts, readily certifiable results, relatively short lines, few if any complaints from candidates. Even in the post-presidential merriment of 2000, Ion Sancho's office stood out from the rest of Florida. So now Sancho is investigating allegations of drinking on primary night by some of his employees.
Considering how well our elections have run, maybe he ought to find out what they were drinking and send a case to colleagues in some other counties. Montgomery entered Florida State College for Women, she found there was no provision for recreation for women students outside of a couple of tennis courts.
Some said it was not quite ladylike for women to take physical education and was a hazard to the health of women to take violent exercises.
Montgomery had a doctorate in physical education, and the coach had only a bachelor's degree, she still remained head of the department of physical education.

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