The Budget

Of course it is not possible to be paid more and yet get less, as the 40% rate applies only to earnings above the threshold. I think the raising of the threshold is ridiculous and any spare money should be used to provide better services. All that raising the threshold achieves is to lower the tax base. It’s a very cynical budget, preparing the way either for a snap election or one forced by failure of the Brexit negotiations. I’m amazed that anyone with a modicum of awareness has fallen for these tricks. 

If you look at the spending plans to 2023 you see that the budgets for unprotected departments continue to fall, so an end to austerity is at least five years away. A few quid in your pocket while public services continue to fall apart doesn’t sound like a good deal to me. 

The one good thing for me is the ending of any more PFI contracts. Good riddance. 

hungryhalibut posted:

Of course it is not possible to be paid more and yet get less, as the 40% rate applies only to earnings above the threshold. I think the raising of the threshold is ridiculous and any spare money should be used to provide better services. All that raising the threshold achieves is to lower the tax base. It’s a very cynical budget, preparing the way either for a snap election or one forced by failure of the Brexit negotiations. I’m amazed that anyone with a modicum of awareness has fallen for these tricks. 

If you look at the spending plans to 2023 you see that the budgets for unprotected departments continue to fall, so an end to austerity is at least five years away. A few quid in your pocket while public services continue to fall apart doesn’t sound like a good deal to me. 

The one good thing for me is the ending of any more PFI contracts. Good riddance. 

At the end of the day's there's never enough money for all the things people want and we all have priorities on where the money is best spent - but's it's all based on personal opinion. For example, the Chancellor has directed the bulk of his public spending into the NHS, local Councils and Universal Credit so now Teachers are up in arms over the £400m they're only getting for Education. Speaking for myself as a higher rate tax payer, I am fed up with people pointing fingers like I'm some sort of modern-day Onassis who has a moral obligation to pay more in tax so the government can get more money to keep everyone happy. If they want more, they should borrow it. 

That little extra in the pocket isn't going to go far once the price of fags, booze and spam is going to rocket up in the coming weeks.

What this country needs is a proper debate on spending and taxation. People seem to want great services yet not to have to pay for them. While borrowing is logical for capital spending, it cannot be a long term solution for funding current expenditure. Nobody in their right mind would borrow for their weekly groceries, unless they were in a desperate position, and neither should government. Debt must be repaid, and how is that done? Through taxation, which is why current expenditure should be funded through taxation in the first place. People fortunate enough to earn enough to pay the 40% should think themselves lucky to earn that much, as the majority of the population is not so fortunate. The Tories, of course, know what makes their supporters tick. 

hungryhalibut posted:

Of course it is not possible to be paid more and yet get less, as the 40% rate applies only to earnings above the threshold. I think the raising of the threshold is ridiculous and any spare money should be used to provide better services. 

The one good thing for me is the ending of any more PFI contracts. Good riddance. 

If you have a job with irregular and lumpy work volumes and income it is possible to be 'worse off' due to the striking of the Tax Year e.g. income in a 'good year' pushes in to marginal tax thresholds, perhaps when the following year volumes and income are far lower. I know a few self-employed people who 'manage' this via invoicing dates and being very careful to try and even-out their workloads. 

On the aspect of better services, I agree - while I accept the 40% threshold hasn't kept pace over the last few years, my view is there is/should be a greater imperative on service delivery.

As for PFI/PPP, absolutely - in (high) theory a good way of managing projects but the inherent tensions around delivering value/what commitment should be engaged by public bodies (via 'expensive' leases) and generating a profit allied to structuring long term financial funding nowadays, renders such approaches as far too complicated and riven with far too many underlying assumptions....the challenge though remains as to how some material infrastructure projects can now be funded?

The simple answer to the funding is that it’s done though the public purse. I’ve worked on quite a few PFI projects and boweowing from the PWLB is always a lot cheaper than private sector bank funding. What made the PFI cheaper to the local authority is the government annual revenue payment. This meant that the local authority had no choice in practice, though the whole life cost to the public purse was far higher. The advantage for the government is that the capital is off balance sheet, which reduces public spending as the capital asset is on the special purpose vehicle’s balance sheet rather than the state. It is just a slight of hand. 

hungryhalibut posted:

What this country needs is a proper debate on spending and taxation. People seem to want great services yet not to have to pay for them. While borrowing is logical for capital spending, it cannot be a long term solution for funding current expenditure. Nobody in their right mind would borrow for their weekly groceries, unless they were in a desperate position, and neither should government. Debt must be repaid, and how is that done? Through taxation, which is why current expenditure should be funded through taxation in the first place. People fortunate enough to earn enough to pay the 40% should think themselves lucky to earn that much, as the majority of the population is not so fortunate. The Tories, of course, know what makes their supporters tick. 

Whenever this topic comes up, the focus invariably seems to be on finding ever larger amounts of funding for public services via increased taxation.

There's a nagging feeling, however, that before further increasing the tax burden, a serious look at just how that tax money is being spent is long overdue.

There seem to be so many areas, both nationally, and with local government, where profligate spending on pointless and ill-judged projects seems to have become the norm.

There's little point in my producing anecdotal evidence in support of my views, particularly where it involves my own local authority, but my research over the last few years has revealed some quite staggering levels of misuse of funds.

hungryhalibut posted:

 People fortunate enough to earn enough to pay the 40% should think themselves lucky to earn that much, as the majority of the population is not so fortunate. The Tories, of course, know what makes their supporters tick. 

I won't speak for any other 40% tax earners on this Forum but I would welcome a big tax hike on the top tax rate earners. There's only about 350,000 of them so if they demonstrated nobody would notice and I'll bet they don't even know how much money they have anyway. Bring on the revolution!

hungryhalibut posted:

What this country needs is a proper debate on spending and taxation. People seem to want great services yet not to have to pay for them. While borrowing is logical for capital spending, it cannot be a long term solution for funding current expenditure. Nobody in their right mind would borrow for their weekly groceries, unless they were in a desperate position, and neither should government. Debt must be repaid, and how is that done? Through taxation, which is why current expenditure should be funded through taxation in the first place. People fortunate enough to earn enough to pay the 40% should think themselves lucky to earn that much, as the majority of the population is not so fortunate. The Tories, of course, know what makes their supporters tick. 

Agreed. Banks should drop interest on accounts past a certain level and have full taxation instead. Petrol and other automobile fuel should be taxed more heavily.  Landlords to pay out 90 % of earnings.  A new "accountability" tax on those that need it, and those who haven't got it.  Tesco club card points to be replaced with a loyalty donation to a political party of choice.....

hungryhalibut posted:

What this country needs is a proper debate on spending and taxation. People seem to want great services yet not to have to pay for them. While borrowing is logical for capital spending, it cannot be a long term solution for funding current expenditure. Nobody in their right mind would borrow for their weekly groceries, unless they were in a desperate position, and neither should government. Debt must be repaid, and how is that done? Through taxation, which is why current expenditure should be funded through taxation in the first place. People fortunate enough to earn enough to pay the 40% should think themselves lucky to earn that much, as the majority of the population is not so fortunate. The Tories, of course, know what makes their supporters tick. 

More specifically people want great public services and for SOMEONE ELSE TO PAY FOR THEM.

This is absolute natural human behaviour - perfectly understandable. It only gets a little tedious when people dress it up as a moral crusade when it is actually self-interest.

I'm being a little flippant here. Since the financial crisis the exchequer has taken a significantly bigger chunk of higher earners income in three main ways:
a) introduction of a 45% rate
b) removal of the tax free allowance 
c) massive cut in ability to make tax free pension contributions. It used to be pretty much unlimited in any given year subject to a lifetime limit on the pot of £1.5m. It has now been cut to £10k per year for total company and personal contributions  subject to a £1m limit.

Honestly, I think all of these things were necessary given the massive hole in the public finances and the need for those with the broadest shoulders to take the biggest load, etc. I do think it is a bit annoying when people (especially but not only politicians) say that the high paid haven't made a contribution - the combination of a b and c above can easily have cut take home pay by 15% - in NOMINAL let alone REAL terms.

But the point I want to make is this - people on incomes from 30-100k have largely been insulated from higher tax takes apart from a bit of "fiscal drag" in thresholds. A lot of people on incomes 20-30k have benefitted materially from the rising tax free allowance. Very low earners and those on benefits have suffered from some reductions. 

So... the poor and the highly paid have born the burden of deficit reduction. People on lower-middle, middle and upper middle incomes have been protected. Where should the chancellor go next for tax for additional contributions? 

JEDT posted:

The highly paid have been hit by a …"….. massive cut in ability to make tax free pension contributions. It used to be pretty much unlimited in any given year subject to a lifetime limit on the pot of £1.5m. It has now been cut to £10k per year for total company and personal contributions  subject to a £1m limit".

You make a fair point in some respects. However, your claim that the highly paid have been hit by a reduction in their ability to make almost limitless 'Tax-Free' pension contributions is a little misleading . The point I would make is that this was a perk that was only available to the very rich, and certainly not to the poor or relatively low earners, and was in effect a legitimate (and encouraged) tax avoidance scheme which allowed the very rich to significantly reduce their tax contribution by deferring payment whilst their earnings were high.

Many people would claim that this 'perk' for high earners was unfair and should have been withdrawn long ago.       

Without wishing to be irritating, I’d point out that the annual pension allowance is £40,000, including personal and employer contributions. To get to the £1m with an annual allowance of £10,000 would take 100 years. 

As to where the Chancellor should go next, I’d have restored the fuel duty escalator, put the top rate of tax back to 50p, and removed charitable status from private education as a starter. I’d make council tax on second homes five times the standard rate, and would extend the right to buy to private rentals. I’d nationalise the railways so that the profit remains with the state. And I’d call off Brexit. That lot really would end austerity. 

Hmack posted:

JEDT posted:

The highly paid have been hit by a …"….. massive cut in ability to make tax free pension contributions. It used to be pretty much unlimited in any given year subject to a lifetime limit on the pot of £1.5m. It has now been cut to £10k per year for total company and personal contributions  subject to a £1m limit".

You make a fair point in some respects. However, your claim that the highly paid have been hit by a reduction in their ability to make almost limitless 'Tax-Free' pension contributions is a little misleading . The point I would make is that this was a perk that was only available to the very rich, and certainly not to the poor or relatively low earners, and was in effect a legitimate (and encouraged) tax avoidance scheme which allowed the very rich to significantly reduce their tax contribution by deferring payment whilst their earnings were high.

Many people would claim that this 'perk' for high earners was unfair and should have been withdrawn long ago.       

 

How was it misleading? It was an incentive for pension saving that had been created by politicians to be used exactly for that purpose. People used it in exactly the way it was meant to be used. It in effect reduced the tax rate for a lot of people. It was intended to do so. You can make an argument that it was too generous. You can also make an argument that the tax rate should be 60%. Adjusting either is adjusting the tax take.

The reduction in that allowance was every bit as much of a tax rise as the introduction of a 45% rate. 

If you read my post you'll have see that I agree with you that this change was justified given the parlous state of the government budget. But that is entirely different from arguing that this doesn't "count" as a tax rise on the well off. It was.

Again - my point is quite simple : higher earners HAVE been asked to pay a chunk more tax. A lot of people seem to be ignorant of that or even dishonestly pretend that it hasn't happened. 

Without diverting too much how many people have an idea of how valuable Jeremy Corbyn and John Macdonnell's pension  is compared to the £1m limit? https://www.mirror.co.uk/news/...decent-thing-9973747 Mirror reports it as £1.6m in March 2017 so it will be a chunk more than that by now (another 18m of service in a final salary scheme makes a chunky difference).

Anyone think Labour are going to be arguing for a big levy on top end public sector pensions? Or will they just keep looking to stick it to higher paid private sector workers? I think I know the answer.

It’s always been the case that public sector pensions are better than those in the private sector. It partly makes up for the lower pay. Anyway, pensions should be dumbed up rather than down, if dumbing up is such a thing, but I’m sure you get my drift. 

JEDT posted;

How was it misleading?

Only in that the tax free allowance from which high earners benefited (that I am aware was put in place to encourage pensions saving)  and that is now being withdrawn, was not of benefit to anyone other than the well off. 

I take your point completely, but I simply meant to make the point that high earners who made use of the Tax Free pensions payments now simply have to pay tax on £30,000 that has up to now been waived - a legitimate tax avoidance vehicle that was not available to relatively low earners and that has been enjoyed exclusively by the relatively rich for some time now. 

I think I can do the Maths (or arithmetic) by the way, otherwise my degree (in mathematics) was a complete waste of money . The £40,000 annual pension allowance over a fairly typical working lifetime of 25 to 30 years would take you over the £1m limit.            

Anyone think Labour are going to be arguing for a big levy on top end public sector pensions? Or will they just keep looking to stick it to higher paid private sector workers? I think I know the answer.

I really don't know, but even as someone who does not support Corbyn, I would be extremely surprised if they were to target higher paid private sector workers to the exclusion of top end public sector workers. I have spent my entire working life in the private sector, but my view is that it is the average public sector worker (particularly nurses and teachers) rather than the average private sector worker who has been hardest done by in recent years.   

hungryhalibut posted:

It’s always been the case that public sector pensions are better than those in the private sector. It partly makes up for the lower pay. Anyway, pensions should be dumbed up rather than down, if dumbing up is such a thing, but I’m sure you get my drift. 

You are out of date: https://www.bbc.co.uk/news/uk-politics-40480766 - public sector pay moved higher that private sector pay some time ago. So your argument about pensions doesn't stack up these days.

I tend to agree that we need to encourage better pensions - rather unclear why whacking pensions tax allowances for money purchase schemes helps that though...

Hmack posted:

JEDT posted;

How was it misleading?

Only in that the tax free allowance from which high earners benefited (that I am aware was put in place to encourage pensions saving)  and that is now being withdrawn, was not of benefit to anyone other than the well off. 

I take your point completely, but I simply meant to make the point that high earners who made use of the Tax Free pensions payments now simply have to pay tax on £30,000 that has up to now been waived - a legitimate tax avoidance vehicle that was not available to relatively low earners and that has been enjoyed exclusively by the relatively rich for some time now. 

I think I can do the Maths (or arithmetic) by the way, otherwise my degree (in mathematics) was a complete waste of money . The £40,000 annual pension allowance over a fairly typical working lifetime of 25 to 30 years would take you over the £1m limit.            

Anyone think Labour are going to be arguing for a big levy on top end public sector pensions? Or will they just keep looking to stick it to higher paid private sector workers? I think I know the answer.

I really don't know, but I would be extremely surprised if they were to target higher paid private sector workers to the exclusion of top end public sector workers. I have spent my entire working life in the private sector, but my view is that it is the average public sector worker (particularly nurses and teachers) rather than the average private sector who has been hardest done by in recent years.   

Your maths looks right to me but what point were you making about the 40k allowance? DO you mean that the 40k is generous or the 1m tight? And what do you think of the fact that the allowance for high earners is only 10k? 

I tend to think that the 10k limit for high earners and the loss of the tax free allowance while easily defendable as progressive measures do have the unhelpful feature that they are very "below the radar" in that they are pretty chunky tax raising measures on the well paid that few people not effected are aware of - i.e., they hide the contribution that the well paid are now making

Looking at the other areas Phil has singled out for his attention in this Budget, really glad to see that the "Hi-Tech" giants will finally come under the radar but not sure where I stand on help for the high street as IMO I don't think it's decline can be solved by throwing money at it. Councils really need to do their bit too by enticing people into town centres instead of Retail Parks. They can start by having more car parking, making it free and restricting the number of coffee and charity shops.

If they provided free parking, which services should they cut in order to cover the funding shortfall? Street cleaning? Litter? Environmental Health? 

hungryhalibut posted:

Without wishing to be irritating, I’d point out that the annual pension allowance is £40,000, including personal and employer contributions. To get to the £1m with an annual allowance of £10,000 would take 100 years. 

As to where the Chancellor should go next, I’d have restored the fuel duty escalator, put the top rate of tax back to 50p, and removed charitable status from private education as a starter. I’d make council tax on second homes five times the standard rate, and would extend the right to buy to private rentals. I’d nationalise the railways so that the profit remains with the state. And I’d call off Brexit. That lot really would end austerity. 

Sorry HH - missed that

What is your point about the 10k/100 years? Leaving aside the (very) small point that your 100 years calc ignores some help from compounding investment growth - I assume you are agreeing that a 10k allowance is pretty stingy! Basically the move to a 10k allowance said more or less "you earn too much to deserve help with pension saving beyond this token gesture". I think that is quite harsh (if - as I have now said a few times - perhaps necessary under the circumstances).

Without wishing to be irritating, can I gently inquire if any of those tax measures (beyond the fuel escalator) would hit you in the wallet? If not do you take my point that people tend to want good services but not to pay for them themselves? And I don't mean to sound arsey because I'm genuinely interested in this - do you think someone with a 20k stereo genuinely isn't affluent enough to pay a bit more?

That isn't meant as a cheap shot I just mean that it is quite easy to always see that people with more money than you are living in unconscionable affluence without recognising just how decadent ones own lifestyle could appear to people worse off than you. 

I know exactly where I fit in to the income distribution curve and how fortunate that makes me. I'm not whinging about paying a lot of tax - I get a funny slightly perverse pride at seeing the size of my contribution to the common good on my tax return. I do get a bit tired of people thinking that the answer to all our budget pressures is to stick it to people in my income band rather than make any additional contribution themselves after my like for like tax take has already gone up a chunk.

If Councils were to start attracting folk back into town centres and away from retail parks, then the increased footfall would probably result in many of the currently empty shops in most of our high streets becoming re-occupied, with a resultant increase in income from business rates.

Where I live, the push to banish cars from the city centre, and encourage everyone onto either bicycles, or park and ride facilities, has simply had the all too predictable outcome of killing the town centre shops ................... not exactly rocket science, is it?

hungryhalibut posted:

If they provided free parking, which services should they cut in order to cover the funding shortfall? Street cleaning? Litter? Environmental Health? 

Isn't this something of a chicken and egg scenario here hungryhalibut? The "High Street" is dying, people are voting with their feet and going to Retail Parks. Less people parking, less car parking collections = less services paid for. How do you propose the trend be bucked?

dave marshall posted:

If Councils were to start attracting folk back into town centres and away from retail parks, then the increased footfall would probably result in many of the currently empty shops in most of our high streets becoming re-occupied, with a resultant increase in income from business rates.

Where I live, the push to banish cars from the city centre, and encourage everyone onto either bicycles, or park and ride facilities, has simply had the all too predictable outcome of killing the town centre shops ................... not exactly rocket science, is it?

I agree, people want to take their cars, it's an independence thing and they don't want to tramp around with lots of bags and then when the kids are tired and playing up hang around waiting for a bus. Having said that, it works in big cities - London, Oxford, etc where there's not enough car parking period, those spots are eye-wateringly expensive and some areas are pedestrianised. I guess if the place to shop is enough of a destination in itself, people will make the sacrifice but not in the 'burbs it seems.

Jonners posted:

hungryhalibut posted:

If they provided free parking, which services should they cut in order to cover the funding shortfall? Street cleaning? Litter? Environmental Health? 

Isn't this something of a chicken and egg scenario here hungryhalibut? The "High Street" is dying, people are voting with their feet and going to Retail Parks. Less people parking, less car parking collections = less services paid for. How do you propose the trend be bucked?

The glib easy answer is hike the bisiness rates very substantially on the out of town retail parks...

More to the point, though is the likes of Amazon, Starbucks etc (even Tesco outside the UK, I believe) should be required to pay tax in the coutry where the money is made - I don’t know by how much, but that would help a bit, while maybe also redressing the balance of purchase cost helpingbthe high street shops survive, as no doubt at least some of that would be passed on in higher prices to the consumer.

that saud, I am not an economist, and know little about tax.

JedT posted:

hungryhalibut posted:

Without wishing to be irritating, I’d point out that the annual pension allowance is £40,000, including personal and employer contributions. To get to the £1m with an annual allowance of £10,000 would take 100 years. 

As to where the Chancellor should go next, I’d have restored the fuel duty escalator, put the top rate of tax back to 50p, and removed charitable status from private education as a starter. I’d make council tax on second homes five times the standard rate, and would extend the right to buy to private rentals. I’d nationalise the railways so that the profit remains with the state. And I’d call off Brexit. That lot really would end austerity. 

Sorry HH - missed that

What is your point about the 10k/100 years? Leaving aside the (very) small point that your 100 years calc ignores some help from compounding investment growth - I assume you are agreeing that a 10k allowance is pretty stingy! Basically the move to a 10k allowance said more or less "you earn too much to deserve help with pension saving beyond this token gesture". I think that is quite harsh (if - as I have now said a few times - perhaps necessary under the circumstances).

Without wishing to be irritating, can I gently inquire if any of those tax measures (beyond the fuel escalator) would hit you in the wallet? If not do you take my point that people tend to want good services but not to pay for them themselves? And I don't mean to sound arsey because I'm genuinely interested in this - do you think someone with a 20k stereo genuinely isn't affluent enough to pay a bit more?

That isn't meant as a cheap shot I just mean that it is quite easy to always see that people with more money than you are living in unconscionable affluence without recognising just how decadent ones own lifestyle could appear to people worse off than you. 

I know exactly where I fit in to the income distribution curve and how fortunate that makes me. I'm not whinging about paying a lot of tax - I get a funny slightly perverse pride at seeing the size of my contribution to the common good on my tax return. I do get a bit tired of people thinking that the answer to all our budget pressures is to stick it to people in my income band rather than make any additional contribution themselves after my like for like tax take has already gone up a chunk.

 

 

Paying what I pay too, I’d just appreciate it if I wasn’t chased for the odd 68 pence outstanding. Still as the old slogan goes ‘Every little helps’. 36 years contributing to the pot with a few more to go methinks???? and that included being made redundant with 25 years service with my payoff hit at 50 %. - that still hurts but think of how many potholes I didn’t fill.