***How will Gordon Brown pick your pocket today?
***Save on tax - move to North Korea
***RECOMMENDED ARTICLES: Why you should never buy a new car... What will Budget 2006 bring?...
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It's the big day. Budget 2006.
Lots of people are describing it as Gordon Brown's last Budget before he moves into Number 10. (That's metaphorically speaking, of course. The Chancellor already lives in Number 10 the Blairs bagged Number 11 because it's bigger and they have a larger family to house).
We can only hope Mr Brown gives up the reins to the UK economy before the next Budget. But we have a feeling that it may take a much heftier shove than the peerages-for-loans scandal to force Tony Blair kicking and screaming from office.
And we're also sceptical that today's Budget will be the steady-as-she-goes non-event that many spectators are predicting. The Chancellor never misses a chance to ratchet up the tax take.
The only question is - how does he plan to do it this time?
An analysis by accountants Ernst & Young suggests that Gordon Brown is about to raise the UK's tax burden to its highest level since the early 1980s. And by next year, the tax burden will be at its highest level ever.
According to The Sunday Times, Patrick Minford at Cardiff Business School has shown that the basic rate taxpayer pays £48.50 in tax (including VAT) for every £100 earned. A higher rate payer pays £57.10.
And it's not just the voting public who are staggering under the tax burden. In an otherwise rather positive article on Mr Brown's Chancellorship, The Times's US columnist Gerard Baker points out that: "business taxeshave been rising under Labour. UK companies now face a tougher fiscal environment than almost all the country's major competitors."
All that tax goes some way to explaining why retailers are having such a tough time. Not to mention all the red tape helping to strangle productivity, one of Mr Brown's bugbears. So will the Chancellor perhaps take some steps to address the burden?
Of course not. As broker Charles Stanley points out: "one might expect Mr Brown to err on the side of caution: a tax-raising Budget now, to provide some leeway for munificence ahead of his elevation." You can read more about what Charles Stanley expects from the Budget in the recommended article below.
One of the main concerns about a high tax burden is that it encourages wealthy citizens and large businesses to move out of the UK and find more conducive places to operate.
When thinking of low tax regimes, North Korea is probably not high on anyone's list. And yet according to the official KCNA news agency: "The people of the Democratic People's Republic of Korea enjoy a happy life, not knowing what the tax is like."
Of course, North Koreans don't know what many things are like. Things such as always knowing where your next meal is coming from, for example, or having an electricity supply that runs for 24 hours at a time. Somehow, we think Bermuda's popularity as a tax haven is probably safe for the time being.
Turning back to the UK, a code of practice to govern the estate agency industry has just been approved by the Office of Fair Trading. The Ombudsman for Estate Agency scheme is able to award compensation to buyers or sellers if it finds they have been badly treated. About 70% of estate agents are expected to have signed up by April.
Given the levels of dodgy dealing in the industry, the Ombudsman may have a challenge on its hands dealing with all the complaints. Although we don't like to direct Money Morning readers away from our own wonderful MoneyWeek website, this is important. If you are thinking about buying a house especially all you vulnerable first-time buyers out there take a look at this piece on the BBC's website first: Buyer beware
Taken from the BBC's "Whistleblower" series, it's a great expos on the sharp practices used by estate agents in getting buyers to overpay for properties, among many other things.
When reading it, you should also bear in mind that these people are the ones putting together the majority of house price statistics you read about in the papers. If you can't trust them to act honestly when dealing with pensioners and over-borrowed young couples, how can you have any faith in their ultimately self-serving house price calculations?
I know that many of our own readers have worked, or do work, in the property industry. If any of you have your own tales of horror to share with us (anonymously, if needs be), I'd love to hear from you. Write to: firstname.lastname@example.org, and I'll put the best on our Reader's Letters page.
Turning to the stock markets
The FTSE 100 closed virtually flat at 5,991. Steel maker Corus was the main riser, up 11% at 94p amid reports that it is in mergers talks with Russian rival Evraz. Bid rumours also pushed Cable & Wireless up 6% to 112.75p. For a full market report, see: London market close
Over in continental Europe, the Paris Cac 40 climbed 10 points to 5,148, while the German Dax gained 9 to close at 5,911.
Across the Atlantic, US stocks ended lower as markets took a fairly upbeat speech on the US economy by Federal Reserve Chairman Ben Bernanke to mean there may be several more interest rate hikes to come. The Dow Jones slipped 39 to 11,235, while the S&P 500 fell 7 to 1,297. The tech-heavy Nasdaq dropped 19 to 2,294.
In Asian trading hours, oil was steady, trading at around $62.30 a barrel in New York. Brent crude was trading at around $61.40 a barrel.
Meanwhile, silver hit a 22-year high of $10.57 an ounce, before edging back to around $10.53. The US Securities and Exchange Commission has approved rule changes to allow the listing of Barclays long-awaited iShares Silver Trust. The exchange-traded fund will be backed by silver held in vaults, and is expected to soak up much of the available supply of the metal, boosting demand. Spot gold remained trading at around $553 an ounce. For more on investing in silver, take a look at our website: It's time to hoard silver
In Asian stock markets, the Nikkei 225 fell 129 points to 16,495. Exporters were among the main fallers on fears that US interest rate hikes have some way to go before the current cycle hits its peak.
And in the UK today, as well as the Budget, the Bank of England releases the minutes from its March interest-rate setting meeting later on this morning. It seems likely that every member of the Monetary Policy Committee, except perennial dove Professor Stephen Nickell, voted to freeze the key UK rate at 4.5%.
And our two recommended articles for today...
Why you should never buy a new car
- There are many ways to lose money without it being your fault, says MoneyWeek editor Merryn Somerset Webb. But a sure way to pour cash down the drain is to buy a new car. To find out why you should always buy second-hand and for Merryn's other money-saving motoring tips, click here: Why you should never buy a new car
What will Budget 2006 bring?
- What will Budget 2006 contain? The Chancellor might have laid out his stall in the Pre-Budget Report in December, but don't be surprised if there are some more stealth taxes to come, says Jeremy Batstone at Charles Stanley. To find out why Gordon Brown may go for a tax-now, spend-later Budget, click here: What will Budget 2006 bring?
John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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