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Tax credits - climbdown or listening ?

27th Oct 2015
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Nothing beats a good old British constitutional crisis . But this one is intertwined with a manifesto pledge of the government.

Either way this compelling viewing is a good old political tussle . Mr Osborne has to go ahead , even Labour admit this, but by slowing down the impact is he showing weakness or is it a veiled message that he believes he is strong enough to bend a wee bit but hold course broadly speaking ?

From my viewpoint he is trying to wean the people off their addiction to the substance that the Labour party peddled and now admit is unaffordable but was used as a bribe.  If people have withdrawal symptoms they need to know that it is for their own long term good.

As to the perceived inequality of all of this perhaps it was unequal for those who are ineligible for the credits but had to fund them out of their hard work .......or did nobody notice that ?  

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Replies (12)

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By ShirleyM
27th Oct 2015 10:11

Low wage economy

Definitely a climb down. He wouldn't have listened if the Lords hadn't stepped in.

This is borne of the low wage economy that is prevalent in the UK today. Also I believe (hope) that people are waking up to the spin that makes out they will be better off when actually they will be worse off.

How will raising the tax threshold help people on such low wages? It's the usual smoke & mirrors and is insulting to our intelligence.

If you earn £50k per year I don't suppose a drop of £1K or £2K would be too painful, but it you earn £4K a year then it's a major blow. The majority of people live up to their income (that includes the better off and not just the poor), and a sudden drop is cruel. Phasing in the cuts (as they have with landlords) would be far more acceptable and give people time to rearrange their finances and prepare for the cuts.

EDIT: stopping large businesses (such as Next) from shipping in hundreds of migrant workers for min pay jobs would ease some of the burden on the taxpayer, but then a Tory Lord heads that group!

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By User deleted
27th Oct 2015 17:43

This is just the start ...

... IMHO.

Tax credits have just absolved a certain type of employer from paying a fair wage.

What is more sensible is having a proper minimum wage, which to me needs to be variable, people in some areas need more than in others and to force all employers to cover the most expensive areas is not fair.

The cynic in me thinks the defeat was expected and is part of a longer term strategy ...

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By jimmercy
27th Oct 2015 18:01

Fair/Living wage

We must get to this if we hold ourselves to be a decent civilised society.

While we get there I would expect that same decent civilised society to engage in a small amount of income distribution to top up the incomes of those who work but definitely not for those who are only interested in sponging off the rest of us.

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By User deleted
27th Oct 2015 20:31

Kind of agree ...

... but what is needed is a system whereby new business can get graduated funding to employ people, because a new business needs staff to grow, but can't afford staff until they have grown, bit of a ctach 22.

So if the governent paid a reducing proportion on their salary over a period, may be once sensible business plans had been produced, that would benefit everyone.

Top up is fine, but it should be temporary, not permanent.

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Norman Younger
By Norman Younger
27th Oct 2015 20:50

Living wage

One of the greatest impediments to success is the poverty trap , which is a nasty by-product of a welfare state. Those who strive to break free form the poverty trap endure pain along the way but they know there is light at the end of the tunnel . 

What is happening now is that the government is forcing everybody into this pain in the hope that people will be galvanised to strive to earn more , which is where the living wage comes on . Cruel to be kind perhaps ?

 

 

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By ShirleyM
27th Oct 2015 22:49

So there will suddenly be lots of higher paid jobs?

While ever businesses can get decent workers for min wages there is no incentive to pay a decent wage.

If they can't get decent UK workers they ship in migrants, and this is the root of the problem. Too many people chasing too few jobs. If employment was high AND there weren't thousands of migrants eager for min pay jobs (because it's still a hell of a lot more than they could get in their home country) then businesses would have to pay more to get the better employees. If we didn't have a low pay economy then min wages would only attract the useless workers or those who find it difficult to get any job at all, eg. the disabled, ex-criminals, etc.

I think the government are getting the message though ... tax credits and benefits supports businesses, not people, as it allows businesses to pay less than is needed for a half decent living standard.

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By justsotax
28th Oct 2015 11:18

you have to laugh

'working' tax credits are about the only benefit that are given to those who 'work'.  The issue seems to be that people think that tax credits are given to those who sit at home watching sky on their 60 inch flat screen tv. 

 

If only those who make up these rules walked in the shoes of those less fortunate rather than just giving them a quick glance and suggesting they look comfy enough.

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By ShirleyM
28th Oct 2015 11:42

Another laugh

People thinking that well paid jobs are there just for the taking, and those who don't have well paid jobs are the ones at fault for being lazy, or lacking in ambition.

People take a min wage job because it's that, or nothing! Why else would they do it?

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By justsotax
28th Oct 2015 17:02

didn't you know

Shirley...people love working for £6.70 an hour....that way they know they can have bundles of tax credits whilst lazing around all day...well not all day - they have to do that job.  I wonder where all of these hard working but mortally offended people who have their taxes spent on wasters will do when all of those coffee houses close down because no one wants to clean the tables or toilets because they are better off not working due to the 'perception' of WORKING tax credits. 

 

Presumably some of those 'hard working' people are the very same who feel that £6.70 is good pay and are happy for the government to subsidise their business....

 

Rant...over...ish 

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Norman Younger
By Norman Younger
28th Oct 2015 20:48

The hard workers

Indeed , many SMEs thrived by "colluding" with workers to keep a lid on wages but without it the job of that worker would not have existed . It shows just how badly designed the system was. Some of the biggest gainers were the business community - no wonder they voted for a 2nd term of subsidies.

But like all things that are too good after about ten years or so we all realsie that the party is going to end becasue people are getting drunk.

With regards to cleaning the tables at Starbucks - well having never set foot in one I couldn't care less . Either their prices go up or the service goes down or they go out of business. That's capitalism for you.

A bigger worry is who will empty the bedpans in care homes and hospital where they can't simply vanish. Apprentices anybody ?

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By justsotax
29th Oct 2015 13:19

You are right with regard to
Starbucks but what labour did do in the late 90s was to increase public sector pay (particularly nurses) or bemoaned their low pay. Now we have a situation where the health service is s money pit where wages are out of control and every one has a gold plated pension and bemoans the apparent poor working conditions they work in.

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Replying to paulwakefield1:
Norman Younger
By Norman Younger
30th Oct 2015 09:40

Public pensions

I was speaking to friends who are civil servants with government pensions and such like. I pointed it out that for an ordinary self employed person to be able to have the same sort of benefits as them upon retirement they need a pension pot of well over a million pounds . And not only that , they have to manage what they have invested in if it is property . Leaving it in a commercial scheme is very risky and most investment managers offer poor return at a high prices

Most of them have absolutely no chance whatsoever of a decent retirement anywhere near the lifestyle they enjoyed when self-employed, which incidently is not always a bed of roses .

Trouble is that they don't want to wait , they want good times today and tomorrow. Jam today and jam tomorrow, which is a lot of sugar - just don't tell the chief medical officer

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