Economy Home Truths

[Magschoice]

Just read this article:

Former Chancellor Lord Hammond has said the government & the prime minister must risk unpopularity and tell "some difficult home truths" about the state of the economy.

“That (cost wise) it has been the equivalent of fighting a war. The effects of which are going to be with us for a very long time”

“There will continue to be a rise in unemployment post pandemic, which is already at the highest level it has been since 2015.”

The government are 2 trillion in debt. I fear massive job losses and spending cuts. I do think the housing market will hold up though, to a certain extent

What are everyone’s thoughts?

@Stovetopespresso
It wouldn’t be easy for us, you cut your cloth according to your salary and we also have a high mortgage (SE), child care, SEN child with additional therapy costs we haven’t been able to access on NHS since March 2020, DH industry hanging by a thread (but hopefully things looking up!)

But it’s obviously the right thing to do. Everyone has to accept that!

@Crazycatlady83 you know it! its gonna be our generation which cops it in the short term. the millennials and younger havnt even had a chance to get much that is taxable yet. the older gen have really high expectations.

I agree with that bit, Crazycatlady, but IMO it's certainly straying into ageism to suggest it's mostly been done to protect older people

Granted there's a kernel of truth there, but given the demographics of SM use, it's not mainly seniors who've been whipping up panic and screaming for lockdowns for the best part of a year

I also sometimes wonder if reluctance to pay too much tax is driven by the knowledge that, all too often, it's pissed straight up the wall

It seems clear that many of us (myself included) are happy to fund frontline services, proper support and all the rest ... corrupt contracts for cronies and yet more layers of management perhaps less so

We need to invest in children, young people and young families. Taxing wealth, not income, would be a sensible first step.

How would you tax wealth? Not housing - many people have huge mortgages with good equity can’t borrow more. I believe tax fir £500k + homes has been suggested

I think businesses that were able to be open throughout the pandemic like supermarkets who have hiked up prices, Amazon, certain coffee chains and basically any company that has benefitted from the pandemic should pay more tax.

My business has been closed for nearly 9 months out of the year. Why should businesses like myself and others pay more when we have to first save and recover our businesses first. I didn't get any gov help. Tax avoidance should be cracked on and mega corporation tax.

I really feel our generation and children's generation where this is likely to take decades to solve.

All of this doesn't really matter really, what matters is when contracts are handed out to governments friends and donors. A test and trace app shouldn't cost £22 billion. Now I've read that they are planning to use the same woman to make the the covid vaccination passport app. Only if our tax got spent properly on public services, health, education, roads and transports not some middle men to sort out PPE for £30 million or school lunch hampers that cost £5 but charged us £25 more per child while our Mp's etc get to claim hundreds and thousands for their luxurious expenses making us tax payers pay.

Oh god not Dido?!!!

I can't remember which source but I read it yesterday that Dido is going to make this app.

She is utterly useless - so enraging.

That is true, the corruption (both prior to and during the pandemic) is utterly disgraceful.

@liltadpole I totally agree with you regarding the companies able to operate and make a profit during the pandemic should be first in the queue to put their hands in their pockets. I CANNOT believe they are using the same person who cocked up the T+T for £22 billion is in line for the passport scheme. But then again, yes I can believe it! Corruption at the heart of this government is off the scale. I hope you rebuild back your business stronger in double quick time.

I think the message needs to be a rebalancing of the economy. But I fear it’s easier to take from the single mother on benefits, hit the small business, than go after the big boys with deep pockets to pay good lawyers / accountants.

Tax avoidance should be cracked on and mega corporation tax

I get the rationale here, but since all that money buys some pretty clever accountants the "take" may well be less than hoped

Ditto the tax on £500k plus homes mentioned ... again, I get the cash capital bit, but can't quite see how including a home's value would work when there's such a divergence of values across the country. Would a couple in a small London flat really appreciate paying the same as the owners of a spread in a low cost area?

I think inheritance tax has to be addressed. That is the fairest and easiest way of trying to redistribute wealth and properly fund public services. And I say that as someone who is in line to benefit a great deal from inheritance.

Gifting money would probably also have to be looked at at the same time to prevent people from trying to circumvent inheritance taxes.

People are inherently selfish, it's a very natural thing that people want to maximize their wealth and life experiences...but there comes a time when governments should act to regulate this natural impulse which so often perpetuates inequality.

@Crazycatlady83 you have worded it better than me. I just thought these sort of corruptions happened in different countries and it's really shocking to see it during this pandemic. None of our public services are underfunded, the budget isn't used efficiently from the NHS bosses to our local council bosses. But as you have said, they will target businesses like myself, single mothers on benefits, disabled people, car owners who need it for work and children's future in education. I just feel sick to the stomach that they can get away with it.

I think businesses that were able to be open throughout the pandemic like supermarkets who have hiked up prices, Amazon, certain coffee chains and basically any company that has benefitted from the pandemic should pay more tax.

Fine in theory, but impossible in practice. For a start, we can't mandate a back dated tax increase, so the profits they made during covid will be taxed at rates prevailing at that time. Secondly, there's a fundamental requirement for tax to be fair, i.e. all businesses to be treated the same. Any suggestion of imposing a higher rate on one business but not on another will end up in endless court cases.

What we DO have, though, is two rates of corporation tax. We historically have a small companies rate (small businesses relatively low profit) and a "main" rate for bigger companies. Up to the last few years, the main rate was a lot higher than the small company rate, but in the last few years, the main rate was reduced down to the same rate. It's perfectly within Rishi's remit to increase the main rate (applicable to bigger more profitable companies) and leave the small company rate alone, and that could be done with effect from 1 April, the start of the new company tax reference year.

Inheritance tax/ gifting again targets the middle classes, giving no incentive to own your own house/ study +++ years for higher paying occupations.
Much fairer for everyone to pay a portion. Less corruption would save a great deal.

@suggestionsplease1

I think inheritance tax has to be addressed. That is the fairest and easiest way of trying to redistribute wealth and properly fund public services. And I say that as someone who is in line to benefit a great deal from inheritance.

Gifting money would probably also have to be looked at at the same time to prevent people from trying to circumvent inheritance taxes.

People are inherently selfish, it's a very natural thing that people want to maximize their wealth and life experiences...but there comes a time when governments should act to regulate this natural impulse which so often perpetuates inequality.

No, inheritance tax is probably the easiest tax to avoid. It brings in mere buttons compared with other taxes.

Extend NIC to occupational pensions is a good money earner. Those without an occupational pension, or those with small occupational pensions would be below the threshold so pay nothing (like part time workers on low pages pay no NIC on their wages below the threshold).

Pensioners on just state pension pay nothing, those with low occupational pensions pay nothing. Only those with an occupational pension of over £8k or so (so with state pension, total income say £18k) would pay NIC on the occ pension over £8k, so it's higher income pensioners who pay some NIC on some of their occupational pension.

Wouldn't cause any hardship, wouldn't impact "poor" pensioners. What's not to like?

QUOTE - All the more reason it will be paid back over decades.

No party is going to make cuts to public services or raises to taxes so severe that they will be voted out at the next election. END QUOTE

But the tories can cut basic services and benefits and their main voters (the wealthy) will still vote for then, then to win over the rest of their votes (the stupid) they can come up with repetitive slogans that the papers and TV channels will push home (like they did with Brexit and the northern areas)

Austerity was ideological. It would kill any hope of economic recovery. It's shit economic policy.

It's depressing how effectively they managed to indoctrinate people so that they actually think it's a sound piece of economics and parrot all the utter bullshit comparing an economy to a household budget.

Unearned wealth needs to be taxed way harder.

@Kazzyhoward it would affect Tory voters

@user18467425798532

Austerity was ideological. It would kill any hope of economic recovery. It's shit economic policy.

It's depressing how effectively they managed to indoctrinate people so that they actually think it's a sound piece of economics and parrot all the utter bullshit comparing an economy to a household budget.

Yes, this. It goes back to Thatcherism. It intuitively makes sense, yet it's bollocks.

Inheritance tax is psychologically toxic, in that most people dislike the idea, including those families who would not be affected by it.

I don't buy that it couldn't make a meaningful difference however. Say 600,000 people die in UK annually (looking at recent figures), and £50k on average more per person was gathered through a pretty strict inheritance tax (given that there are a lot of massive inheritances out there once property is sold)...that would be £30 billion extra annually.

@Kazzyhoward No, inheritance tax is probably the easiest tax to avoid. It brings in mere buttons compared with other taxes
I disagree...
It might be 'buttons' but it would be a signal and a first step to creating a fairer society and getting rid of the social inequality which is going to divide us when we try to recover.

People on zero hours contracts, working all hours but still in poverty, having attended crap schools with no safe study space, will very probably do worse economically. Whereas those with more comfortable backgrounds, contacts to get good internships etc will make it. They won't vote to make things worse for themselves while inherited wealth carries on.