Which taxes should Burnham put up?

Not a tax, so much, as a charge on social media posting. Maybe a penny a pop.

I'd probably pay £1-£2 a week .... but I can see it flooding the treasury with dosh.

At the upper end, I know couples who are doctors and have chosen for both parents to work 80% to stay below the £100K annual income, above which thus not only lose their tax free allowance, they’d also lose funded childcare. By both taking a day a week off, the 30 hours childcare covers the three days both of them work. A very sensible decision, given the tax and benefits regime, maybe nice for the kids too, but crackers for the economy.

As an aside, this government is currently paying Nuffield to treat NHS patients, supposedly to clear waiting lists, but this is leaving some NHS hospitals with half empty clinics and theatres not in use. It also impacts their funding, so they are facing financial hardship. It’s crackers. You’d think these deals would only be available when there was a long waiting list.

I would have pensioners pay a level of NI

Ironically it was Gordon Brown who introduced the 10% rate, but then he scrapped it a couple of years later. I thought it was one of the more sensible things he did, and heaven knows why he panicked and scrapped it.

The thing with a relatively high "starting point" and then the cliff edges, is that people make behavioural changes. So someone currently not paying any income tax due to low income is more likely to want to stay not paying any income tax even if they had the opportunity to have a slightly higher income. Makes no sense of course as they'd only pay it on the surplus, but it's a "mindset" thing. Similarly at £50k, £100k etc., where people don't want to go into the next tax bracket, again, it's only on the excess, but again, it's a mentality thing.

(Of course there are also cliff edges where you're actually worse off for a slightly higher income, but that's not as common).

I've got clients who are constantly juggling bank savings accounts to stay within the personal tax free allowance and savings allowance to cover their interest tax free. It's illogical as they'd only pay £20 tax on a surplus of £100 interest over the £18.5k threshold+allowances, but they'd actually "prefer" to earn less interest to avoid paying tax, than earn more and pay just 20% of it to HMRC. The human brain is a strange thing!!

If we had a lower starting point, and lower starting rate and then more gradual increases as income levels rise, there'd not be the same illogical behavioural aspects which are harming the economy.

We used to have a 10% rate. I remember being told the thinking was that there was value in everyone feeling that they contributed. The stories took the opposite view, continued by this government, that lifting people on low wages out of taxation by increasing the tax free allowance, and paying for it by increasing taxes on middle income earners, has become the group think.

The tax free allowance has been raised over the past couple of decades but the higher rate threshold hasn't, hence the "squeezed middle". People on low incomes are paying less tax, but anyone on average wages or above are paying more. It can't go on as the "pips are squeaking".

I'd actually reduce the tax free allowance to a nominal amount, but at the same time, reduce the basic rate of income tax to say 10% and then have 20/30/40% rates. So more people will pay tax, but at relatively low levels, and we'd not have the stupid cliff edges that disincentivise work.

If we were to raise the threshold of the higher rate of income tax so that people enjoyed the same spending power as their equivalents had under Tony Blair then it would start at incomes of c.£80,000 a year, not c.£50,000.

I read quite recently about a central European country bringing its social spend budget (pension and welfare) back under control by limiting any increases to 95% of the inflation-linked annual upratings.

So whatever happens, government outgoings taper down: i.e., there is an annual increase, but only 95% of it is paid. Very gradually, expectations are managed back to affordability.

If you wanted to turbo-charge the policy, government could allow a similarly gradual rate of increase to the percentage of employment earnings that would not be clawed back from UC.

Raise the basic rate of income tax but increase the tax thresholds.
Tax all benefits, not just the State Pension. It’s ludicrous that pensioners on lower than minimum wage are paying tax.

I accept that "ballooning" was an overly emotive word, born out of frustration with the current situation. It is still increasing and I don't believe it is sustainable on its current trajectory. That aside, I think we're talking past each other. This exchange seems to have become focused on one word and one statistic, rather than the broader point I was actually making.

This isn't economist only territory, and as credible at Portes is, he doesn't speak for all economists. I am not claiming to be an economist, it's just common sense. It's a bit like looking at audited accounts. They tell you where you are, not whether you'll still be able to afford to run the business in 10, 2 or 30 years' time. That's a completely different question. A fairly stable welfare as a % of GDP figure is useful, but it doesn't tell us what happens next. It doesn't tell us what happens as the population gets older, healthcare costs rise, people live longer, or there are fewer working age people paying into the system.

Successive governments have been addressing the situation

If anything, all the tinkering governments have done, and are still considering, to pensions and welfare actually strengthens my point. They keep changing the rules because they know the long term sustainability issue hasn't gone away. There are reports that the rise in the state pension age to 68 could be brought forward. It doesn't take a rocket scientist to understand why the government might think that is necessary. But how do we know whether it will be enough, or even the right course of action, if we don't first ask whether the system is actually sustainable? Do we keep raising the age until it gets to 75? Surely any competent government should be looking at long-term sustainability, not just trying to polish a turd by tinkering at the margins while piling one poorly thought out, unsustainable policy on top of another.

Whatever your view on who should pay more, the only way to raise the amounts under consideration via IT is to increase the basic rate. There are not enough additional or even higher rate taxpayers to move the dial any further. I already keep less than 40% of a slice of my income and then it “progressively” reduces to 45%, which still feels punitive. At the basic rate, everyone pays more.

Ironically the main difference between the UK and the socialist European countries so beloved by MN is the rate at which ordinary/average paid workers are taxed.

Exactly. The Tories froze thresholds or increased them below inflation for 14 years, dragging lots of people with modest incomes (frontline nurses / paramedics / teachers) into the higher rate tax bracket. For the last 3 years we have been hearing that taxes are at their highest level since WW2. For most ordinary people they are far higher. In the 1940s tax thresholds for income etc were so high they didn’t hit ordinary people at all. Where I live there wasn’t even a mechanism for collecting tax from local people because no one earned enough!

Nail on the head. Despite normal political rhetoric, Blair/Brown were actually tax-reducers which goes against the usual Labour policies. Conversely, the subsequent Tory/Coalition governments were actually tax rising Parliaments, again, against usual Tory policies, as they needed income to try to balance the books and also reverse some of the "goodies" handed out by Brown. For some reason, the media never seem to pick up on the realities.

Blair caused us a constitutional mess that prevents any government from achieving its manifesto commitments. He also let Brown sell the national gold reserve to go on a spending spree and oversaw the disastrous public-private partnerships that have virtually bankrupted many hospitals. However, he understood the importance of making a country an attractive place to do business. He kept taxes moderate and raised thresholds with inflation. Consequently, there was a lot of job creation in Britain and a real sense of optimism and being able to save for a better future without being stung by some punitive tax that comes out of nowhere. Right now we have the opposite and it’s causing huge instability.

Yes and then we get more posts cheering for tax rises. If only it’s on others. And the pie shrinks again.

We are losing taxpayers and wealth creators at the highest per capita rate in the world. Increasing taxes is shrinking the pie, not growing the tax take. Government spending needs to be cut and policies that create jobs in the private sector are desperately needed, so that the pie grows.

Why means tested? I understand means testing benefits, not taxes.

Define "poorer".

Lots of working people on or around average wage levels have been massively hit by stealth taxes over the past decade or two, at a time when wage rises havn't kept up with inflation/cost of living/housing costs.

We simply can't tax "ordinary workers" any more. The tax hikes needed (and/or benefit cuts) have to come from the majority of people who aren't working.

Increase tax for everyone by 1-2%
Stop paying untested PIP for people with anxiety or ADHD without proof - let them work and manage their shit like the rest of us
Shake up the NHS - so their are more paid contributions like in other European countries
Shake up IHT - the rich will always avoid chunks - make everyone contribute a bit with the wealthy proportionally paying more
Stop punishing small businesses it stunts growth
Do something/anything about stamp duty - the property
market is stagnating

Taxing turnover? Do you actually know what turnover is!

It’s usually threads filling with more taxes no matter what.

Freeze all benefits for 5 years, increase inheritance tax, introduce a land value tax.
If someone is cash poor but sitting in a £million house, level a charge against it to be paid on sale or change of ownership.

reform CMS - not fit for purpose. Make absent parents pay , penalise them. America , for its faults are so much tougher. Take tax rebates , inheritance, anything to make sure maintenance is paid. Take their passports, if they can’t pay for their kids , they can’t go on holiday.

Well I wouldn’t be targeting the poorer people, that’s for sure. They’re hard enough hit already.

I think he should stop targeting groups or individuals and just put up income tax . I think most people will understand the country’s fucked in every single way , everything is broken and nothing functions and to reverse this we all have to take a hit in taxes .