The day after last week’s budget, I logged onto the BBC News website and clicked on their budget calculator to find out if I was a winner or a loser. The questions are pretty simple: first off, it asks how much you drink, smoke and drive, and then it asks how much you earn, plus a few bits and bobs to cover technicalities. Then, it spits out an answer: did Phil leave you feeling flush, was it more of a hammering at the hands of Hammond? I came away £8 a month better off…and significantly angrier than I expected.
The first problem is that I don’t drink much, smoke or own a car. I know that makes me a bit weird, but still, budgets clearly aren’t aimed at me. Also, way to go successive governments, enshrining these items which are bad for our health and the environment as regular budget giveaways. But there’s a much bigger issue with this calculator: what it misses out.
Let’s ignore inflation. Ignore productivity. Ignore economic growth. Ignore any kind of context. Ignore other kinds of tax as though income taxes and booze duty are the only ways the government raises revenue. Perpetuate a ludicrous idea that personal wealth exists in an economic and societal vacuum—a narrow, individualistic notion of money where all that matters is the tax on your pay and your petrol.
Let’s talk about income. Productivity is a measure of how much money we make per hour worked, taken nationwide. The UK is currently experiencing a productivity crisis—for the last decade, productivity hasn’t improved, for the first time in literally centuries. Whether the budget includes policies which might attempt to revert productivity growth to historical norms will have a far, far larger effect on your long-term wages than a minor alteration to income tax brackets. Yet this ‘budget calculator’ makes no mention of it and, by omission, implicitly minimises hugely important issues like this.
Let’s talk about other taxes. Not only does tax affect you directly, but it shapes incentives around the whole economy, discouraging things which are taxed heavily and encouraging things which aren’t, promoting or sidelining economically beneficial and detrimental activities which will have huge effects on everyone’s future wealth. These not-so-subtle effects will have a far larger influence on the price of a pint than any alcohol duty alteration a chancellor would dare implement.
The calculator ignores benefits in kind—the NHS, roads, schools, scientific research—which the government provides. It ignores the fact that tax savings for you mean less money for them. The foregone cure for cancer and the pothole which gives your neighbour a hefty bill at the mechanic aren’t included in the calculator.
This little web form fails on its own narrow terms by ignoring wider economic issues which affect your wages and buying power, and fails to provide any meaningful analysis of the effects on you and society by ignoring what taxes pay for.
But its biggest sin is to give the illusion of understanding. Making sense of the economy requires numbers—lots of them. But faux-neutral calculators like this are part of a media circus around budgets which incentivises politicians to offer easily-understood trinkets rather than fix actual problems.