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How would you suggest HM Government raise funds

How would you suggest HM Government raise funds to pay for grants.

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Hi all,

It's Friday so you're all bored. So thinking caps on: how will HM government raise funds to pay for all their largesse. My ideas could include, higher VAT rate on luxury goods. Reduce overseas aid to a lower GDP level. Somehow reduce liability for public sector employees.

Insults and brickbats welcome.

Replies (42)

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RLI
By lionofludesch
15th May 2020 12:01

Irredeemable bonds at 0.3%.

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By Open all hours
15th May 2020 12:22

Abolish cash? Severe privacy implications but next time round the SEISS payments will be based on higher figures.

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Hallerud at Easter
By DJKL
15th May 2020 12:41

Not convinced about lowered overseas aid, Covid will prevail until both us and all other countries eradicate it, I suspect more not less aid will be needed as we are only ongoing going to be as safe as the least safe country on the planet- however the aid will hopefully be far better targeted.

The interesting question arises as to whether countries can just get away with money printing, whilst generally bad news vis a vis other currencies/exchange rates, if nearly all countries do it in similar ratios then apart from later inflation pressures maybe there is in part actually not a problem needing dealt with and we all just inflate away most of the cost of all this.

The only things I can currently predict are we are going to get inflation and that nobody but Celtic or Rangers will win the SPL before I die.

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By Wanderer
15th May 2020 12:46

Plant some more magic money trees.

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Out of my mind
By runningmate
15th May 2020 12:47

Governments don't repay borrowing - they just roll it over into the future & let inflation take the sting away.

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By adam.arca
15th May 2020 12:47

Please, no fannying around the edges of tax closing this "loophole" and restricting that "relief."

Let's be honest (for a change) and increase the headline rates of tax.

In fact, let's be even more honest and let's do what Germany did with re-unification costs when they had a solidarity tax. Let's have a coronavirus tax, let's say it is going to be x% and let's say it is going to last x years. Unfortunately, that will be way too much honesty for our politicians.

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By Cheshire
15th May 2020 12:52

Outlawing all Accountants then charging fines and penalties from all, especially the sole traders who have just set up their own GG.

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By Truthsayer
15th May 2020 12:52

I would be very much in favour of cutting overseas aid to nothing, Covid-19 or not. I think the government will be forced to pay off gilts by new money creation, and therefore we may have to pay for it through inflation.

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Replying to Truthsayer:
By Duggimon
15th May 2020 15:14

I've never understood why people stop being people if you're looking at the ones who live on a different island.

Keep the overseas aid and disband the armed forces, stop building/maintaining/developing nuclear weapons, stop subsidising dead industries and we'll be fine.

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Replying to Duggimon:
RLI
By lionofludesch
15th May 2020 15:22

Where do the soldiers get jobs ?

Austerity is a crazy idea. It doesn't work at the best of times. It's certainly not going to work now.

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Replying to lionofludesch:
By Duggimon
15th May 2020 16:14

I would prefer it if all the soldiers got different jobs that didn't involve shooting people, I'm not bothered where.

Maybe in the NHS? They're the new heroes, now that we're at war with a virus instead of the vague and nebulous "terror" we've been at war with for the last twenty years.

I don't think it's austerity to suggest we stop spending money on killing people and propping up travel agents.

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Replying to Duggimon:
RLI
By lionofludesch
15th May 2020 16:24

Duggimon wrote:

I would prefer it if all the soldiers got different jobs that didn't involve shooting people, I'm not bothered where.

Maybe in the NHS? They're the new heroes, now that we're at war with a virus instead of the vague and nebulous "terror" we've been at war with for the last twenty years.

I don't think it's austerity to suggest we stop spending money on killing people and propping up travel agents.

Sure - but HMG employing folk in the NHS instead of the forces isn't saving money. It's spending it on something else.

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Replying to Duggimon:
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By Truthsayer
16th May 2020 11:45

'I've never understood why people stop being people if you're looking at the ones who live on a different island.'

Foreign tyrants look at us that way, and that is one of the reasons we need our armed forces and nuclear weapons. Abolishing overseas 'aid' (i.e. guilt giving by leftist fools) would allow a substantial boost to our armed forces.

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Replying to Truthsayer:
RLI
By lionofludesch
16th May 2020 11:57

Truthsayer wrote:

Foreign tyrants look at us that way, and that is one of the reasons we need our armed forces and nuclear weapons. Abolishing overseas 'aid' (i.e. guilt giving by leftist fools) would allow a substantial boost to our armed forces.

What a load of arrogant, jingoistic tosh.

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Tornado
By Tornado
15th May 2020 13:14

Borrow from me at a decent rate of interest.

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boxfile
By spilly
15th May 2020 13:30

Make working pensioners pay National Insurance contributions. Could be at a reduced rate though, say 7%.
Scrap free prescriptions and make everyone pay something, but at a lower rate of £3 or £4.
Legalise e-bikes and slap a road tax on them. Plus they’d need to be fully insured, giving extra tax on that too.

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Replying to spilly:
Tornado
By Tornado
15th May 2020 14:04

Interesting comments but I might point out that I already pay three times as much tax as I receive as a State Pension (therefore I am actually funding my own pension) and I pay tax on that pension as well.

If I stopped working I would become a net receiver from the State, instead of a net contributor, and thus many others would not benefit from my tax contributions..

Taking NIC from me as well would probably tip the scales and I could retire gracefully and be well looked after by those that still have to work and perhaps have to pay more in tax to make up my shortfall.

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Replying to Tornado:
Hallerud at Easter
By DJKL
15th May 2020 17:19

Aha, all the clients you previously acted for would then go to other accountants so the fees they previously paid to you would merely increase the profits, and taxes paid, by said other accountants- HMG do not care who earns the dosh and pays the taxes on same ,provided someone does.

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Replying to Tornado:
boxfile
By spilly
15th May 2020 23:01

I see your point, but I was thinking more of those who retire and then take up Board of Director roles for 2 or 3 days a month for ludicrously inflated remunerations.
Or you could view it that you are nobly retiring to selflessly allow someone else to enter the tax fray in your stead.

What about making former MEPs pay tax on their EU pensions. They currently receive them tax-free; surely this should change.

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By Louisemunro320
15th May 2020 14:16

Definitely make everyone pay nic irrespective of their earnings, how many times do I get each year what the threshold for nic? And low and behold their profit sits just under so they don’t pay a penny.

Decrease the vat registration threshold online with eu countries (especially now mtd for vat is in place relatively successfully) this would stop the dummong down of turnover as well but technically not raising tax rates

Finally the most important I would suggest is actually chase those taxpayers that currently don’t pay and walk away

Could fix this problem quite quickly

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By nrw
15th May 2020 14:24

Income tax + NI = 44% of UK tax receipts.
VAT = 18%.
One regressive, one progressive, both hard to avoid paying / scheme around.

No other tax >= 10%

Therefore IF paying for this with taxes, there are only two levers which will make a dent.

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RLI
By lionofludesch
15th May 2020 14:35

It'll be tough to reflate the economy with all these extra taxes everyone's proposing.

If I were Rishi, I wouldn't be thinking about significant tax increases for the next few years. It'd just deepen the recession.

You can't run a country like a household.

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By Justin Bryant
15th May 2020 14:51

Believe it or not, since sterling is a fiat currency, to the extend the national debt is owed to the Bank of England (which is a high proportion of it) it can be erased in a matter of seconds with a few strokes of a computer keyboard if the Government really wants to do that (don't forget modern money is no more than electrons and there is no more shortage of money than there is shortage of points on a football stadium's scoreboard), since it has full currency creation and destruction powers. It would be inflationary, but there is nothing to stop that in principle as far as I am aware. A less dramatic alternative would be to convert it into perpetual non-repayable debt.

The main purpose of tax is to give fiat currency a value in the 1st place, so that it is first created by government borrowing and then destroyed by tax receipts. It is thus a myth that tax receipts are "spent" by the government.

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Replying to Justin Bryant:
RLI
By lionofludesch
15th May 2020 14:52

A shortage of points on the scoreboard is a perennial problem, I'm afraid.

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By ireallyshouldknowthisbut
15th May 2020 15:28

Given the disregard with which its been splashed about, I reckon the plan is the BOE will simply write off the "overdraft" as QE. Or issuing HMRC with bonds at a ultra low coupon rate which is more or less the same thing but might scan better politically.

They should be able to get away with it from an inflation POV give the funds largely replace the 'work that would have got done'.

The BOE was already doing this through the banks in Q1, with loans being more or less given away.

I can see Boris loving this option as a cloud pleaser.

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Replying to ireallyshouldknowthisbut:
RLI
By lionofludesch
15th May 2020 15:33

ireallyshouldknowthisbut wrote:
<

I can see Boris loving this option as a cloud pleaser.

Cloud pleaser ??

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Replying to lionofludesch:
By ireallyshouldknowthisbut
15th May 2020 16:02

Along with Tax Talc

My voice to text converter is a bit sh*t but is quicker than my fingers.

That and I do not speak very clearly being an Essex boy innit. [I had to type Innit]

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Replying to ireallyshouldknowthisbut:
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By brian-scholar
15th May 2020 16:58

@I really should-You and me both, I have the same problems as you.

Well I think HM Government should try and find a way of taxing the likes of Amazon, Google, Facebook et al on their UK revenue. After all, they must be doing very well out of this situation, given so much is being done online with them.

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Replying to brian-scholar:
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By nrw
15th May 2020 19:57

The UK has already implemented the Digital Services Tax of 2% on revenue from 1 April 2020?

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Replying to ireallyshouldknowthisbut:
RLI
By lionofludesch
15th May 2020 17:07

ireallyshouldknowthisbut wrote:

That and I do not speak very clearly being an Essex boy innit. [I had to type Innit]

Thassud speyk reyt.

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By Mr_awol
16th May 2020 01:03

Over the next few years:
Increase class 4 to 20%
Increase BR dividend tax To 20%
Increase Corporation Tax to 20%

Level the playing field with employment. I thought the whole point of running a business was to incur or reap the risks and the rewards. The clamour from the business sector for equal treatment with employers suggests they have changed their mind so give them what they want.

Yes this would cause me untold misery but the people have spoken

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Replying to Mr_awol:
RLI
By lionofludesch
16th May 2020 06:55

Mr_awol wrote:

Over the next few years:
Increase class 4 to 20%
Increase BR dividend tax To 20%
Increase Corporation Tax to 20%

Is this some sort of punishment for being in business when Covid-19 came along? The self employed get £7500 max so how long would it take for them to be out of pocket with swingeing tax rises like that?

Some of you lads have no idea.

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Replying to Mr_awol:
RLI
By lionofludesch
16th May 2020 07:01

Duplicate

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Replying to Mr_awol:
Hallerud at Easter
By DJKL
17th May 2020 11:15

Hardly level- 20% CT followed by 20% IT on the 80% left, an effective rate of 36% for a basic rate taxpayer.

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Replying to DJKL:
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By Mr_awol
18th May 2020 13:48

DJKL wrote:

Hardly level- 20% CT followed by 20% IT on the 80% left, an effective rate of 36% for a basic rate taxpayer.

It's not quite level, no - but it would be a massive step towards it.

If people are unhappy then they could always pay themselves a salary instead...……….

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Replying to Mr_awol:
Hallerud at Easter
By DJKL
18th May 2020 14:14

What if they do not work for the company but merely invest in it?

You are looking at this as if all companies are owner managed, they are not, some of my income comes from shares I own in quoted companies, if you apply these rates to dividends what do you do with bank interest received(which at least is tax deductible within the paying company/bank as an expense)

If you want to predict a change, maybe the £2,000 dividend threshold will be the one that goes.

One of the reasons I gave up my practice and just retained my employments was I was not particularly happy suffering CT and then HR tax on the dividends, it was a question of valuing my spare time; put taxes up too high and nobody will bother chasing that extra £x thousand a year, tax take will reduce, HMG suffers, whilst one can argue about the precise shape/turning points on a Laffer curve for the UK it is hard to argue there is not a curve.

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By Duhamel
16th May 2020 19:03

I’m with Lion on all of this. Raising taxes right now would be suicide. Not sure where all this talk as come from.

I think Rishi needs to put something out that tax rises are off the cards at least until the economy is steady. I think someone else said inflate the debt away over time, which is the only sane option here.

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Replying to Duhamel:
RLI
By lionofludesch
16th May 2020 19:23

Duhamel wrote:

I’m with Lion on all of this. Raising taxes right now would be suicide. Not sure where all this talk as come from.

It's like folk think we have to repay this debt in the next fortnight. It took over 60 years to pay for World War 2.

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Replying to lionofludesch:
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By adam.arca
17th May 2020 10:57

lionofludesch wrote:

Duhamel wrote:

I’m with Lion on all of this. Raising taxes right now would be suicide. Not sure where all this talk as come from.

It's like folk think we have to repay this debt in the next fortnight. It took over 60 years to pay for World War 2.

I doubt anyone is suggesting we simply pay for this via taxation.

But nor should it simply be “inflated” away which is an equally naive concept.

As you said, running a country isn’t the same as running a household but that shouldn’t be used as an excuse for playing the never never game.

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Replying to adam.arca:
Hallerud at Easter
By DJKL
17th May 2020 11:32

A large chunk of it will likely be inflated away whether by design or not.

Of course the problem is not actually going to be the spend right now on grants etc, they are a cost now but likely a relatively short lived cost, the real problem is going to be the longer term drop in profits and tax on them coupled with the soaring amounts of benefits etc that will need paid to those losing their jobs or whose business fails etc, that problem is going to be with us for a long time and the money printing to cover it, without the economic activity to match , will likely create inflation which we will no doubt struggle to contain.

There is certainly a severe dose of the 1970s and 1980s coming vis a vis unemployment, the main economic difference being this time it will not be caused by an oil price spike/ under investment since end of WWII- I graduated from a decent university , Edinburgh, in 1982 and like many then, with graduate unemployment through the roof, could not start any career- I poured pints from summer 1982 to October 1984 when I went back to university, this is the sort of thing we are about to experience but imho far worse than the early 1980s.

S0 for me, full circle, my early experiences when I started becoming aware of politics were three day weeks et al, stunning inflation, and then high unemployment, the economics I read at school and university in the period from 1977 to 1982 reflected that, whilst cause is different there is a real sense of deja vu, except this time I expect it will be even worse.

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Replying to Duhamel:
RLI
By lionofludesch
16th May 2020 19:24

Duplicate

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Replying to Duhamel:
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By Mr_awol
18th May 2020 13:44

Duhamel wrote:

Raising taxes right now would be suicide. Not sure where all this talk as come from.

It's coming from Rishi outright telling the self employed when he launched the SEISS scheme that “There is currently an inconsistency in contribution between self-employed and employed ...………(snip)………………. especially as we look when we get through this and we’re all chipping in together to right the ship afterwards, [we’ll be] making sure that everyone’s doing their bit.”

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