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Rather than removing the 45p tax rate, I would have removed the “personal allowance attrition” between £100k and £125k which is unfair in terms of making lower earners pay higher effective tax rates on their marginal income than higher earners.
(That’s assuming I would have cut taxes on the highest earners in the first place, which I wouldn’t have done! But as a basic principle of fairness, the above should go, and the top tax rate adjusted accordingly to make it neutral to the exchequer).
The only thing in that list that is actually likely to do anything useful is removal of VAT on tourist purchases. The rest is just trickle-down economics, which always works.
Staggering approach, clumsily give people money which will increase inflation, then land them (or their children and grandchildren) with a huge bill to be paid back over next few years
The "fiscal event" has been announced, which included the following:
- Stamp Duty cut
- Income tax cut to 19p from next April; 45p rate being scrapped
- NI rise reversed
- Corporation tax rise scrapped, so with remain at 19%
- 40 new "investment zones"
- Banker Bonus cap lifted
- £60bn of borrowing to cover energy support for next 6 months
- VAT free shopping for overseas visitors
I daren't talk to my neighbours about this. Both retired a couple of years ago, living on state pension (little or no private pension because of the jobs they did - of which there are several, any job they could get), neither can work now (health conditions), idea of a holiday is a week in a caravan at this time of year in the next county. But still need to eat and heat their home. I, at least, will benefit slightly from the cut in income tax.
When the Institute for Fiscal Studies comes up with
Reversing NICs and corporation tax rises would leave debt on an unsustainable path
Fortunately, most of my family members in their thirties and forties don't understand macro-economics so won't realise that it is almost certainly them that will have to pay, and pay.
Rather than removing the 45p tax rate, I would have removed the “personal allowance attrition” between £100k and £125k which is unfair in terms of making lower earners pay higher effective tax rates on their marginal income than higher earners.
Agreed, that one is bizarre as it affects people in a very specific earnings range. Keep it simple, keep the same allowance for everyone, and instead change the rate bands.
I agree with the stamp duty changes but would go further and abolish it completely, other than possibly for second homes/investment properties and very high value properties (e.g. £1m+ increased by inflation each year). It is a tax on workforce mobility which is the last thing we want.
Agreed, that one is bizarre as it affects people in a very specific earnings range. Keep it simple, keep the same allowance for everyone, and instead change the rate bands.
I agree with the stamp duty changes but would go further and abolish it completely, other than possibly for second homes/investment properties and very high value properties (e.g. £1m+ increased by inflation each year). It is a tax on workforce mobility which is the last thing we want.
I do sometimes wonder how many houses in London are owned by people who would rather live in the countryside, but don't want to take the hit on stamp duty.
Either Truss and Kwarteng have some knowledge about the economy that ensures these steps will lead to success and economic growth, or the country is heading for massive, massive trouble.
If I were a betting man I know where my money would be going. Betting against the pound feels like a particularly good idea right now.
Cut the 45p income tax rate? What's the point of that?
Truss seems to be a Thatcher minus the concern about inflation and debt. In other words, a less intelligent version of Thatcher. I don't particularly like Thatcher, to put it mildly, but at least one got the impression she knew what she was doing, if you make the assumption you sign up to her outlook on life.
You wouldn't think her father was a left-wing top maths professor, would you?
I do sometimes wonder how many houses in London are owned by people who would rather live in the countryside, but don't want to take the hit on stamp duty.
It's a funny one. If downsizing it doesn't really hit very much as it comes out of your profit, but it's a psychological hit which discourages moving, a bit like the "bag tax" is a psychological hit - most* people could easily afford say £1-2 for 5-10 x 20p bags for their weekly shop (itself probably costing upwards of £100), but the fact that you have to pay *anything* acts as a powerful dissuader.
I just think there are better ways to tax property to push the desired behaviour, e.g. an ownership tax (which Council Tax already is, before people shout about the whole idea) encourages you to sell up or rent out if you're not using a property, helping solve the empty property issue, and encourages downsizing/rightsizing rather than discouraging it as stamp duty does.
* Please don't wheel out the "RUK standard minority" here, I know full well there are people who can't stretch to an extra £1-2 per week, but they're very much a minority!
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I'm not totally sure to be honest. Personally I'd change it to 50p and push the band up a bit (and get rid of the stupid allowance thing), but each to their own. Keep things simple - the allowance thing is pointless complexity, just as is the savings interest allowance which should just be £1K for everyone and move the bands around to get the money back.
Similarly rather than take the 20p band to 19p I'd rather see the personal allowance increased so more low-wage people don't pay any Income Tax. It's not like they'd be paying no tax at all, they already pay a load of VAT.
My tax will be lower, my NI contributions will be lower, and obviously the previous announcement means my gas and electric bills will be lower. Even my beer won't cost more.
So why don't I feel positive about life right now?
My tax will be lower, my NI contributions will be lower, and obviously the previous announcement means my gas and electric bills will be lower. Even my beer won't cost more.
So why don't I feel positive about life right now?
The decreasing value of the £ will make imported goods more expensive (and we're a net importer), so any tax savings could easily be wiped out by more expensive daily purchases.
I'm sure the death toll for those "scroungers" on benefits being subjected to food and fuel poverty this Winter will be seasonally adjusted to show just how generous this Gov't is and why, as the right wing media will inform us, it was all their own fault anyway for not working hard enough in the first place.
Oh, and don't bother with the scrutiny of the OBS...this may have provided some alarming revelations which would negate this gambling the nations finances on the equivalent of a doped up horse (see Tory fiscal policy since taking office here)..but hey, that's one of the joys of autocracy !
My tax will be lower, my NI contributions will be lower, and obviously the previous announcement means my gas and electric bills will be lower. Even my beer won't cost more.
So why don't I feel positive about life right now?
I wonder what brexiters think of it. All that effort to demonstrate that they hate us and want us to be poor and isolated and the end result is that people with darker skin can buy things cheaper than they can. I don't remember that on the side of a bus.
Yes I am also fortunate enough to (superficially) benefit. The issue is that the consequences could easily outweigh the benefits even to those in our position. [And that’s purely from a self interest perspective; as you say most people are not entirely self interested].
Just as left wing economics doesn’t necessarily benefit those on lower incomes in the long run, right wing economics doesn’t necessarily benefit those on higher incomes. I feel like the former is (rightly) well recognised, while the latter is not.
My tax will be lower, my NI contributions will be lower, and obviously the previous announcement means my gas and electric bills will be lower. Even my beer won't cost more.
So why don't I feel positive about life right now?
Because we as a country are in debt and this will just increase the debt; savage spending cuts are going to be the inevitable consequence of such a policy somewhere down the line, as sure as night follows day. The first budget after the next election, if they somehow manage to win, is my bet for the timing for said cuts.
Of course, it's all about precisely that: attempting to win the next election. If we enter a black hole in say late 2024 or early 2025, shortly after said election, that's of little concern, I suspect, for the current regime if they manage that - as they will then be safe in power for a further four to five years.
I would prefer "There's nothing conservative about this Conservative government. A completely offensive government.'
There will be Conservatives, many members of the Party, who signed up during the Thatcher 'living within your means' agenda who will despair at this, realising its consequences, but gaining only marginally from its measures. Although I don't necessarily believe that was always the right strategy, at least I understand where it was coming from. Trusconomics appears to be rather akin to taking the nation's money into a casino and placing it all on a corner on a roulette table.
My tax will be lower, my NI contributions will be lower, and obviously the previous announcement means my gas and electric bills will be lower. Even my beer won't cost more.
So why don't I feel positive about life right now?
The idea of me, a comfortable middle income home owner with no debts (other than a mortgage) and a relatively secure job gaining financially at the expense of those less fortunate leaves a very unpleasant taste in the mouth. Added to that the money she'll take off the poorest thanks to 'tightening up' the rules on universal credit won't even come close to covering the costs of this, hence my 'in the short term' caveat.
I see that the estimated £150bn cost of keeping energy bills at a so called affordable level, and the lack of windfall tax to pay for it, are old news. It’s a shame the news has moved on from such large items. The smaller cost of covid furlough spending held peoples attention far longer, perhaps still.
The idea of me, a comfortable middle income home owner with no debts (other than a mortgage) and a relatively secure job gaining financially at the expense of those less fortunate leaves a very unpleasant taste in the mouth. Added to that the money she'll take off the poorest thanks to 'tightening up' the rules on universal credit won't even come close to covering the costs of this, hence my 'in the short term' caveat.
I'm rather saddened that you feel this way. The people that we should all be angry with are those at the very top who are laughing all the way to the Bahamas bank at the expense of everyone else, low and middle income alike.
As someone who is currently claiming Universal Credit, it will be interesting to see what extra hoops are introduced (despite being in the limited capability for work group). They mentioned introducing meetings with work coaches; this happens already. If they want to make those meetings more frequent, which I suspect will be the route that the DWP will take, then the number of sanctions is going to go through the roof as people simply cannot afford to attend. I also refuse to believe their nonsense about providing additional support; the Job Centres simply do not have the staff to do this.
One measure that would have helped everyone would have been a cut in VAT, but there's little point in suggesting this to a government that is so hell-bent on enriching their mates and feathering their own nests for when they eventually get shown the door.
One measure that would have helped everyone would have been a cut in VAT, but there's little point in suggesting this to a government that is so hell-bent on enriching their mates and feathering their own nests for when they eventually get shown the door.
Indeed. A VAT cut helps everybody, though it does help the well-heeled a bit more since low-income earners spend a greater proportion of their income on VAT-exempt/zero-rated items.
Indeed. A VAT cut helps everybody, though it does help the well-heeled a bit more since low-income earners spend a greater proportion of their income on VAT-exempt/zero-rated items.
Removing VAT from domestic energy would be neutral at the moment given the Government are subsidising energy. Effectively they are paying the VAT to themselves.
I think cutting VAT generally could have been a good move. It could probably be done without significant borrowing, given inflation leads to a bigger VAT take. It would help everyone (accepting that higher spenders would benefit more), and it might also help some businesses to weather the storm.
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