To think now is not the right time for tax cuts

[jm9138]

So Hunt wants to cut NI having already cut it last Autumn. The total costs of these cuts will be £13.5 bn. To put that in perspective, this would more than cover the £9bn real terms cut in the education budget since 2010 and with the total NHS dentistry bill being £3bn he could double that and cover the education budget fall with £1.5bn left. Maybe with that he could, I don’t know, fund some private operations to reduce some of the NHS waiting times. AIBU to think that maybe there are other things to focus on now than tax cuts?

What’s left to cut? Health, education, council services are on their arses.

True.

But more importantly, people should demand that money (our money) is spent on things that actually benefit us. Because a huge amount of money is being wasted, and our public services could be so much better. The money is there, it's just not used in the most appropriate way.

We literally gave away 7 Billion last year on foreign aid. That would have paid for an extra 175,000 police officers or nurses.

This year it will be over 8 billion pounds that we literally give away.

How can the government claim poverty when they literally give away tens of billions of pounds to other countries.

And don't give me the "it's the law" bollocks, they can change the law.

We are all being taken for fools.

I am not sure that an extra £500 a year is the difference between a dentist working or not but I agree that the tax base needs to move to be more balanced towards unearned income.

I feel like I say this a lot at the moment. I don’t earn a fantastic salary, and have quite high outgoings, but I would pay LOT more tax of various kinds voluntarily if it mean we would definitely get better services.

Excellent post. Also the cost of living crisis doesn’t just affect individual.

The basic cost of delivering all of these services has gone up - like it or not.

YANBU. And as a lower earner I'd actually be happy to pay a few quid extra tax a month, as long as everyone else was paying their fair share too.

As many others have said, it's a bribe pre-election. However, it won't work because it won't make a significant enough difference to people each month. Not with car insurance and mortgages and rents rising, along with many other things. People will still be annoyed that we are all paying more, and now we will have less tax is the system to fund public services too. Seems a stupid decision to me.

Is is ALWAYS the right time for tax cuts. Taxes have never been higher (since WW2 anyway) Public services have never had more money. And never performed worse than they do today. It is lazy thinking to keep throwing more taxed, borrowed and printed money at corrupt incompetent government departments.

The real problem is why 10 million working age people are not working. And we keep importing cheap labour and adding to the pool of net recipients in the economy. All thanks to 25 years of economic mismanagement.

Perhaps think beyond the soundbites and ask questions other than how to throw other people’s money at this problem.

We have had, and will continue to have, high taxes because borrowing has been so high and not sure I want them to be doing any more of that to cover day to day expenses.

The interest rates one is an interesting one. Everyone buys the mantra that interest rates had to go up to curb inflation when it was real economic supply shocks that had driven price rises - it was not demand pull inflation (although there is an argument that was part of it given the government has been printing money for years).

Many moons ago, interest rate rises were supposed to curb inflation by cutting private investment and improving the exchange rate so imports became cheaper. Now no one even pretends it is for this - raising interest rates takes money from net borrowers (ie mostly working people with mortgages) who have high marginal propensities to consume and gives it to people who are net savers (normally retired people with no mortgages) who have a low propensity to consume. Or put another way, takes money from people with low net wealth and gives it to people with high net wealth. Of course the government is not going to come out and say 'we are going to solve inflation by letting the Bank of England take money from people with no wealth and give it to the wealthy' but that is what has happened.

The Government also sat on its hands and whilst pretending 'they had a plan' just did nothing. They could have done something. If they saw inflation as a demand problem they could have (for example) increased taxes on people with mortgages. They are the ones hit by the interest rate rises anyway. These taxes could then have been used to pay off some debt. This would have had the added benefit that interest rate rises would not have needed to happen and government debt repayments would have been lower. But that would have required a political backbone (I am not suggesting this is the approach they should have taken, but if the idea was to take money out of the system from net borrowers at least this would have resulted in some long term benefit to the exchequer)

Public services have never had more money??? Er, right. You must be a child if you can’t remember a time when public services were better funded than they are now 🙄

The real problem is why 10 million working age people are not working. And we keep importing cheap labour and adding to the pool of net recipients in the economy. All thanks to 25 years of economic mismanagement.

Its 9.2m & the recent increase is largely due to the silver exodus of 500k mainly due to health.

And we keep importing cheap labour and adding to the pool of net recipients in the economy. All thanks to 25 years of economic mismanagement.

No gov is going to stop labour migrants. We need them with the massive shift in population demographics.

Taxes can’t realistically go down. They are likely to increase

“Last year, pension costs increased by £6 billion to £110 billion. By 2025 they are expected to have ballooned to £135 billion, a figure £2 billion more than the combined day-to-day budgets for the Department for Education, the Home Office and the Ministry of Defence, Times analysis shows.”

I agree.

Most people who can afford it want to pay for good public services. I'd rather chuck a bit more in the pot and have access to good medical care and transport services, better funded schools and teachers, better provisions for children, elderly, SEN etc.

I dont understand economics enough to know if this will have a knock on of more jobs and get people spending. Or if it will go on peoples rent increases, which are basically interest for the banks.

I do see public services have nowhere left to go - certainly the ones that i am involved with are not functional. So I am pro more funding, but i am a bit tired of the tories so id like less of my money under their control.

I think the whole idea is to purposely cut tax so if labour win they are forced to put tax up to get public services to stand still, not even improve. Then the tories say "see they are a party of high taxation and nothing has improved" and be back in after 1 term.

Two of the single best tax reforms he could do are:

A proper property tax. As this would be paid on property, you couldn’t dodge it by the owner being a Cayman Island SPV etc. You own a £5mio property, you pay a decent annual tax on it. This would raise significant revenue, and cause absentee owners to think carefully about holding empty property.

CGT should be paid at your personal highest tax rate. Again, this would raise decent revenue and stop things like share but backs in favour of decent dividends. Again, this is clearly both efficient and fair. Of course, they should also bring back indexation, as it is unfair to pay CGT on inflation.

For some reason, no one is keen on either of the above, probably because the majority of MPs would pay more tax.

I think they need to raise tax on unearned income. Earn another £10000 pay between 29% and 65% in tax. ‘Make’ £10000 on the stock market pay 20%. Make £1 million from your house price going up pay 0%. That does not make sense to me.

Agree, it’s not productive & that’s before you even look at how wages have stagnated. 50k today was around 28k in the early 00s!

Several things can be true at the same time. It is true that their will be some level of incompetence (although I think the corruption is at a higher level than the civil service), it is true that we need to help more people into work and it is true that we have had economic mismanagement for a good while now. It is true we would all love to pay lower taxes and it is true that the tax burned is increasingly falling on middle income earners whilst those with the most often contribute the least. But it is also true that the education budget is 9% lower in real terms than 2010 and the dental budget I think is 50% lower in real terms.

It is true that this means that the curriculum has been paired back in schools to the point where my local high school has no out of school options at all - no sports teams, no school band, no school plays. They cannot even afford a specialist language teacher and the building from the 50s has needed replacing for at least 10 years. It is true that the dental cuts mean that vast swathes of the country have no access to NHS dentistry and that the nearest NHS dentist to my market town is 70 miles away and the nearest anyone can actually register with over 100 miles away.

It is also economically crazy to cut taxes. All it will do is destroy public services and increase inequalities.

With no health service to speak of and schools failing, the money in people’s pockets will go on private healthcare and schooling (for those who can afford it).

Our net tax is already one of the lowest in G7.

Why don’t we invest massively in social housing. Long term it would stop tax for housing benefit ending up in private hands, better standard of homes can improve health outcomes. Housing is the root of so much of our economic problems.

Thanks for expanding on your OP. I agree it was supply shock which let the inflation genie out the bottle (on the back of 10+ years very loose global monetry policy) and then of course because most were supported through covid there was no reduction in demand. Add the war and the energy supply shortage and we're in a tricky spot.

Of course interest rate rises will benefit net savers, 'twas ever thus. The whole point is to discourage business spending/investment and consumer spending and put the brakes on the economy. I don't believe it's part of a larger conspiracy to funnell more money to the wealthy (the BoE who set monetry policy are independant after all).

No one could confidently say they saw the inflation problem coming. Sure they saw the supply inssues emerging through Covid but at the time most economists and policy makers believed it would be 'transitory' (oops) and that once the bottle neck had been passed inflation would quickly return to near where it had been. I guess a level of complacency had crept in as so few people influencing such decisions had had to deal with this problem before, it seemed we could endlessly print without the inlfation needle moving.

Only facts are true. Everything else is just an opinion.

Facts are that the tax take has not been higher since WW2 and proportion of net contributors is now below 50%.

Completely agree.

I think they are so terrified that the monied would leave the country they dare not do this. Oh sorry, did I say monied - 'wealth generators' is the term isn't it. Given you don't pay any tax on wealth I don't really care where they go.

Our net tax is already one of the lowest in G7.

But the burden is unequal which is a problem. Look at the % tax Rishi paid.

or Kier.