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?

Cutting taxes stimulates the economy for growth. People have a little bit more money to spend. As the economy grows wages rise and people pay more tax. Revenue paid in taxes pays for Hospital, schools etc.

@Newbutoldfather I would include property taxes in general wealth taxes

I think we give away far too much for a country with so much debt borrowing.

They can cut the council tax any time they want.

The services we get for the money we pay are appalling. So better off paying less.

Not to mention the fines when the slightest thing is done wrong.

It's like paying someone to punch you in the face.

wasn’t 20% VAT meant to be temporary?

I think we are conflating things here. There is nothing to stop several things happening at the same time. Public sector services can be underfunded and collapsing, welfare bills and taxes can be too high, the balance of tax and from who it is drawn can need rebalancing and causing collapse in the private sector. Of all the things that need to happen though choosing to cut taxes when your public services are collapsing does not seem - to me - the right choice.

This. Income tax is very high, but wealth is very low.

You don't get what you pay for if you live in Birmingham, that's for sure, and that's with a 20% CTax rise in the next 2 years. Lucky you having such a well run council. Not all of us are so fortunate but I get your general point.

Can you tell us where this is please ?

The problem with taxes for the last decade is that it's not been spent properly on delivering good public services. A lot of the money is being given to private companies, often with links to those in power, to run public services on private contracts. There's a difference between the two.
For an organisation to be making profit running public services, not all taxpayer's money is being spent on the service. It isn't average people who are benefitting from this arrangement.

Just looking at education as an example, there's some MAT CEOs who are paid hundreds of thousands of pounds and are giving themselves £9,000-10,000 pay increases when schools have teachers paying for glue sticks and resources out their own pocket.

Ah the old virtuous circle and/or where are we on the Laffer curve. It entirely depends on what people spend the money on, propensities to consume, whether the tax cuts just fuel inflation. Let's hope you are right. Funnily enough this was/is broadly central to Liz Truss's ideas as well.

Just one point not necessarily related to your post but to a PP and the highest tax rate since the Second World War. Most public services are luxury goods - the more we earn the more we want to spend on these services as a proportion of our income (Health and education etc). So it would be entirely reasonable to assume that as the country gets richer tax would make up a bigger proportion of GDP.

If people having a bit more money to spend stimulates the economy then would this also be the case is energy bills and rents were lower?

Scotland here. Just a reminder that it’s possible to pay sky high taxes and have diabolical public services. We pay circa £700 extra in income tax a month in our household, and we paid double the stamp duty we would have had in England. The education system has dropped like a stone in the international league tables. The waiting list for CAMHS is over 3 years, the number of university places is being hacked at every year to reduce costs (and you cannot even ask to pay tuition fees like the do in England, leading to English kids getting into my local uni while Scot’s with better grades being barred!!!).

You cannot book a holiday on an island in the summer without having real fears that there won’t be a ferry to take you, and one of the most obese countries in Europe is shutting leisure centres at a time when the first minister is sending government money to terrorists in Gaza.

And yet all that we get from those in charge here is Gaza, Gaza, Gaza. Like we don’t have any other problems to worry about.

and yes we are looking to move.

I don't think that cancelling the tax cuts will allow for the things you mentioned. We desperately need those things right now, with our current tax level. We'd have to increase taxes by the same amount if we wanted to fund those (frankly excellent) ideas.

I don't necessarily think that private companies delivering public services is always a bad thing. But they don't need to be everywhere and the way they are managed is pretty appalling on the whole - and this includes allowing management to award themselves massive pay rises when performance is poor.

Heatpumphero
That's very interesting and sad to hear. It's not an area I know much about.
Many many years ago I considered whether moving to Scotland would be something for us to consider because it seemed so much better from what I'd heard, but then friends said that having taught in both systems the Scottish system has much lower academic standards.
The last few years of SNP politics have put me off consider it any time soon.

But if he cuts the NI then this is, in theory, money he could have spent on these things. In all reality he will cut taxes when we don't have the capacity to do so and let the next Government fix the mess.

Wrong.
Unless the majority of your borough's income comes from Council Tax the funding hole in various councils is due to a lack of central government funding PLUS a lack of other revenue sources, e.g. business rates.

Areas with the highest council tax are some of the most deprived like Burnley.
https://www.taxpayersalliance.com/britains_council_tax_burdens_2023

A deprived area has the double burden of many being exempted, so not paying in the first place and usually a lack of commerce that reduces the take in business rates, you can whack the c.tax as high as you want but the issue is not the 'well-off' paying loads it's the number of people not paying.

That's why central funding is a leveller but the gov has withdrawn a lot and blamed it on councils. Sure there's been mismanagement but this ius also the cause. The areas most in need of funding are the least likely to be able to generate it.

Theoretically yes, but there's no sign of any desire to do so. Cutting taxes will just make stuff worse, they'll have to further underfund things ☹️

At least NI us one thing that the Scottish government cannot control. So an NI cut is actually a tax cut for Scot’s. But now they have ramped up income tax even more to compensate so we only got to enjoy a cut from Jan - March.

And I know people talk of fiscal drag but the higher tax rate starts at £43k here and is 41% not 40%.

And the SNP MPs are talking about walking out of Westminster today like the stroppy teenagers they are. Yes the Tory party are a bunch of corrupt idiots, but I would actually prefer that to the intellectually challenged 5 year olds that comprise the SNP.

rant over

Yes as a lower percentage of income will go on rent and heating.

Anything to get more people working, and people working more is a good thing when we have severe staff/skills shortages in so many areas. We have too many people who could work but don't and who could work more hours/days, but don't. We need to chip away at the reasons why that is. Some of the bigger reasons are the tax cliff edges, the way benefits reduce if you earn a little more, the earnings level where marginal tax (deductions) are over 60/70%, etc. There needs to be fewer disincentives for people to sit on their arses. An NIC cut is one small step, just as raising the tax free allowance and aligning the NIC threshold with tax threshold have been small steps.

Holding the £50k higher rate threshold, whilst cutting NIC, WILL help workers but it won't help those who don't have wages but otherwise have enjoyed relative low tax levels for a couple of decades, i.e. higher income pensioners, buy to let investors, etc. This latter group have had it good for a long time and it's time that tax changes started to impact them more than workers.

Getting more people working, and people working more will do far more good for the country than squeezing workers more!! It grows the economy, fills job vacancies, and those people working and working more will be paying more tax in to fund better public services. It's time to look at the bigger picture rather than constantly increasing tax on the easy target of workers under PAYE!

Are your ‘excellent services and amenities’ precisely that because you live in an affluent area where there are not as many demands for social care and other council spending etc ? We live in a borough where many of our libraries and council leisure centres have been shut or use restricted because of financial constraints, it’s an area with a lot of economic deprivation and low quality housing. The council is struggling to meet statutory requirements.
I don’t agree with lowering taxes either btw.

@taxguru what’s your opinion on the low wage economy ? That most are on benefits precisely because they aren’t paid enough…..

YANBU. Public services are on their knees. I grew up in a deprived industrial town in the 1980s. There were concert halls, art galleries, museums, leisure centres, swimming pools, theatres and manicured public parks. They're all under threat now, if not already closed.

If we could afford all these coming out of the 1970s, why are we choosing to allow them to fail now?

Education, social care, housing and health services are all getting worse too, while need is increasing.

Civilisation is in decline in the UK.