Rachel Reeves can’t win, can she?

[anothervoter]

After days and days of negative press and chatter about income tax going up, complaints on Mumsnet and across the media, today’s reports are that idea might be dropped and now she’s being accused of rattling the markets and making the cost of borrowing increase.

Honestly, genuine question- what can she do?

The taxpayer = people who use cash ISAs 🙄
Not taxing something isn't a tax break!!
It's an incentive to encourage people to be fiscally prudent and responsible, to have their own savings.
If you tax savings then you reduce the inflation adjustment, savings become worth less over time and you discourage people from saving.

Cash ISAs are a primary source of funds for building societies and banks, which they then lend out as mortgages and other loans. A reduction in the allowance would decrease the amount of money they receive from savers, potentially leading to a less competitive mortgage market and higher borrowing costs for consumers.

Oh right, so how did they manage before? its been 20k for just 7 years and remind me again of their profits?

What i'm beginning to see though is you want cuts but not the ones you don't like?
Thats a bit of problem isn't it? as we all have our pet likes.

FWIW i use ISAs, only S&S though & the wrap too, but i would support the change to a min amount invested in the UK, say 5 to 10%, makes perfect sense.

Taxing something isn't a cut.
Not taxing something isn't a tax break

It doesn't matter how they managed before, it's what happens now. So you support reducing access to mortgages, increased costs for borrowers?

This is the problem with fiscal + economical ignorance.

I have to take issue with that argument.. Money put into an ISA has already been taxed once via income tax.
Taxing the returns again (interest, dividends, gains) is effectively double taxation on already taxed income.
ISAs simply stop that.
They don’t provide a £7bn tax break. They aviod extracting £7bn a second time from savers.

I think the problem hear is every time you counter, you have to chuck in an insult.

As if you know all the answers.

As i said, the finance industry is doing exceptionally well, this tax break and it is one, despite your moans to the contrary, costs the country £7bn in foregone tax.

It really isn’t a tax break when the invested income has already been subject to tax. Next, you’ll say being allowed to breath in your own home is a tax break; oh wait…

No, not taxing something which has already been subject to tax, is not a tax break.
Not taxing something which has never been taxed, isn't a tax break.

You were the one with a deleted comment for a personal attack against me! At least I don't name change to hide behind that.

Don't give them ideas!

Uh?

The interest etc has never been taxed, its unearned income they aren't taxing the capital.

Plus they give a £1k allowance, on 20k equivalent to 5% rate.

Dividends? again, unearned, Germany have a flat rate tax of 26.5%, the UK is extremely generous.

Germany's economy is built on SME's

No MN reinstated, sorry! they said it was in "error" so you hitting the report button with your "concerns" didn't work did it?

All you every do is come back with snide little side comments, just inside the rules

I wasn't the one to report you 🤣🤣
Carry on

Virtually every time we spend money it’s taxed twice. Fill your car with petrol and the money’s taxed three times. It’s an illogical argument.

Oh come on…

The distinction you’re making between “earned” and “unearned” income is philosophical.
From the saver’s perspective, the money was already earned once through work and taxed through PAYE.Taxing the return again is double taxation, even if you try to label it differently.
The £1k allowance doesn’t actually solve that. It’s tiny relative to inflation, interest rate fluctuation, and long-term saving needs.
Comparing the UK with Germany is apples and pears. Germany’s flat 26.5% tax on investment income sits alongside a much more generous pension system, much higher employer pension contributions and a much lower reliance on private savings.

You’re entitled to your opinion of course. But I fundamentally disagree.

I just don’t agree. Saying “everything is taxed multiple times” isn’t really an argument, it's just describing how redistribution works.
Most governments deliberately tax spending more heavily (particularly on certain things) to discourage over-consumption and raise revenue from economic activity.
Surely, we want to encourage savings so there is less dependency on the state and benefits, more investment capital, and households with financial safety net (so less reliance on the state).
It makes no sense to lump savings returns in with petrol or VAT. They’re taxed differently for a reason.

Agree. Why are people arguing for higher taxes anyway? It’s hampering growth and changing behaviour.

You objected to double taxation. I merely pointed out that it’s inherent in our economy. Interest on investment is passive income, there’s no reason why it shouldn’t be taxed.

I’m not objecting to all forms of double taxation. I’m saying that in a functioning tax system, you differentiate between types of activity because they have different economic effects and allow you to shape behaviours.
There are many reasons why you would encourage savings, some of which I outlined.
So it’s not about “double taxation being wrong”. It’s about avoiding bad taxation that discourages beneficial behaviours. Another example of this would be the changes being proposed to the salary sacrifice pension schemes.

People saved money before ISAs were invented. Plenty of people currently save outside them. What might encourage savings is high interest rates but they’re catastrophic for everyone else.

Seems like a weak argument to me. ISA’s are now the most widely held savings product. At a time when reports suggest that 48% of the population have little or no savings, its doesn’t seem a sensible move 🤷‍♀️

I doubt very much that the prospect of paying tax on any interest over £1k is preventing 48% of the population from saving. Having no money left over to save is probably the reason.

Yes! The government promised growth, but have instead delivered growth - limiting taxes instead of incentives or investments.

So surely encouraging the 52% who do have the financial means to save is a good thing? Otherwise we have 100% of the population with no back up plan for a rainy day or later in life.

Is Labour’s plan just to make everyone dependent on the state?

It feels like you will just argue that black is white. Do you genuinely think that this is a good idea? And the proposals around SS pensions in a country grossly under pensioned?

Blossom always takes the contrary view I've noticed. No matter what. Even if your post agrees with her.

I don’t think a lower limit on cash ISAs will prevent people from saving. In my experience people with enough money to save do so because they value financial security. As I said, the greatest incentive to encourage saving is high interest rates, which are detrimental to the economy overall. Neither do I think that limiting salary sacrifice pension contributions free of NI to £2k a year will stop people paying into a pension fund. The contributions will still be tax free.