Government leaks pandemic tax rises
Is Rishi Sunak about to introduce swingeing tax rises as hinted by leaks to the media? Philip Fisher considers the advisability of raising taxes now and addresses this weekend's government leaks.
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Do you mean swinging or swingeing?
Swinging is car keys in the fruit bowl wife swapping business in suburbia.
Swingeing is drastic.
"Swinging is car keys in the fruit bowl wife swapping business in suburbia."
I went to one of those parties once. Ended up going home with a Ford Mondeo.
It's common to read in supposedly informed media reports how the "very wealthy" can avoid supposedly huge amounts of tax by investing in their pensions and getting top rate tax relief. This supposed outrage is always used to back up calls to limit relief to the basic rate of tax.
I suppose it depends on who is considered "very wealthy" but someone earning over £312,000 can currently put a maximum of £4,000 into a pension and get tax relief for it. Saving them a whopping £1,800 tax. If that were reduced to the basic rate, that would fall to a saving of £800. Costing Mr (or Mrs or Ms or Xe) Megarich £1,000.
Tax Justice!
Increase CGT on second homes. Don't see the problem. Usually it's the people at the bottom that get screwed over.
Oh and the VAT should have been cut to 10% across the board instead of this 5% soft drinks nonsense.
Alistair Darling cut VAT and it worked. No one remembers Osborne insanely increasing to 20% when it was 17.5%.
It's when you read this approach from a Chancellor that you do wonder who they have in their circle and whether any of them could draft a balance sheet if you asked them to.
Gilts are savings assets first and foremost. They are liabilities of HM Treasury by accounting identity only.
Since my spending is your income less tax and your spending is my income less tax, then when those savings stop being saved and are spent they will necessarily generate additional taxation that will eliminate the need for those savings (assuming the money continues to be spent and not saved again!)
All of which is blisteringly obvious if only people would draw up the balance sheets, do the transactions and watch how the balance sheet changes.
There is no need for tax rises at present. In fact it is very dangerous to the economy if we do.
As the economist Warren Mosler would put it: "The unemployment lines tell us we are grossly over taxed even for the current high level of government spending"
I read a piece in the Telegraph or Indy or somewhere last week saying that the Chancellor shouldn't be raising Class 4 NIC because most self employed pay themselves by dividends and got no benefit from CJRS.
Oh. Right. I didn't know that ......
More seriously, I suspect a hike in Class 4 will come. But now is not the time for tax hikes. Give the economy time to recover.
I say this as a disinterested party as I've stopped paying NI of any kind.
Tax rises for a fragile economy just doesn't make any sense. What is needed is a stimulus to the economy more liquidity not less. Where have these leaks come from? Are we sure they are not the views of the few rather than the many who decide upon government policy? Why are we not discussing the increased support that is needed rather than increasing taxes? The Liberal Democrats are proposing a universal income for all, why are we not discussing that as a way forward to restart our economy?