Which taxes should Burnham put up?

[Toohotforwork]

It seems pretty clear that in the Autumn we are in for another massive tax rising budget. Starmer has done of the ground work to show what we need to spend and how there isn't any money, I'm sure the "blackholes" were co-ordinated with the new team for messaging. Labour don't have it in them to cut the welfare bill and to be fair the Tories didn't either - so I can't see that changing.

Which taxes would up increase to fund the country properly?

Personally I'd go the easy route and put 1 or 2p on the basic rate of income tax. It would break the manifesto but one short sharp initiative has got to be better than death by a thousand small increases.

I think the care proposals of getting rid of inheritance tax and replacing it with a 10% charge on everyone is very sensible.

Equalising income tax and capital gains tax seems an easy win as well.

But very few, if any, have explained in detail how they would work. The only way such a tax would work is if it were global and all countries signed up to it.

I think governments are to blame for poverty, not rich people.

But the welfare bill isn't ballooning. As a percentage of GDP, which is generally considered the best way to measure such changes over time, it's the same as it was in 2010 under austerity and more or less identical to what it was under Thatcher in the 80s. Some aspects of it are going up, yes, but some aspects are going down so overall it's remained unchanged for decades. We're misled with constant talk of monetary figures which obscure inflation and also the fact that we're living through enormous population growth (and therefore growth of total GDP and every monetary spending figure).

Here's Jonathan Portes saying some of this on Skye News- I believe he is currently Professor of Economics and Public Policy at King’s College London but was previously a civil servant and chief economist and director of welfare to work at the DWP.

https://www.instagram.com/reels/DaU85JgGC3E/

Here's Jonathan Portes saying some of this on Sky News. I believe he is currently Professor of Economics and Public Policy at King's College London, but was previously a civil servant, Chief Economist and Director of Welfare to Work at the DWP, commenting on a snapshot in time perspective on welfare costs. Factually, he isn't wrong depending on what figures you use for welfare. Strip out pensions and look just at working age benefits, and things might look a bit rosier. Add pensions and health-related benefits, and the picture changes again, because an ageing population pushes costs and the direction of travel for those costs irrespective of who's in power.

The stat is also doing an awful lot of heavy lifting. All it really tells you is where welfare spending is today. It tells you nothing about whether that level is appropriate, affordable or sustainable, where the money will come from, how efficiently it's being spent, the demographics, how fair the financial burden to pay for it all will be spread and so on. It certainly doesn't tell you whether we are heading towards a cliff edge or if whoever is in power has the skills to steer us back onto a financially sustainable path

Sustainability is about addressing known and predictable long term challenges before they become crises, not waiting until you are forced to ask, "Where is the money going to come from?" Which is currently where we are with the state pension. The birth rate started falling c1965. Successive administrations have had decades to plan and deal with it but they chose to kick the can down the road rather than make the medium and long term changes needed to keep it sustainable and reduce dependency on the state.

As for Novara Media, that bastion of neutrality... It's openly on the left, so it's hardly surprising that they selected a carefully curated clip.

TLDR: You may not like the use of the word "ballooning", but welfare spending is rising and, on the current trajectory, it is not sustainable. A snapshot taken out of context is no substitute for robust, sustainable medium and long term planning.

Here's Jonathan Portes saying some of this on Sky News. I believe he is currently Professor of Economics and Public Policy at King's College London, but was previously a civil servant, Chief Economist and Director of Welfare to Work at the DWP, commenting on a snapshot in time perspective on welfare costs. Factually, he isn't wrong depending on what figures you use for welfare. Strip out pensions and look just at working age benefits, and things might look a bit rosier. Add pensions and health-related benefits, and the picture changes again, because an ageing population pushes costs and the direction of travel for those costs irrespective of who's in power.

I don't know what you mean by a snapshot in time perspective on welfare costs? He's comparing welfare spending as a percentage of national income across 5 decades and pointing out that it has remained almost totally unchanged according to the government's own statistics (which compare like for like to the extent that that's possible). As far as I'm aware these overall statistics include state pensions and health related benefits if you mean disability benefits but not the NHS. And yes, while some of these individual areas of welfare spending have gone up (notably pension spending massively), because there have been cuts to other areas of welfare, there has been no overall rise. So it's totally misleading to say that welfare spending is "ballooning" when it isn't even rising.

The stat is also doing an awful lot of heavy lifting. All it really tells you is where welfare spending is today. It tells you nothing about whether that level is appropriate, affordable or sustainable, where the money will come from, how efficiently it's being spent, the demographics, how fair the financial burden to pay for it all will be spread and so on. It certainly doesn't tell you whether we are heading towards a cliff edge or if whoever is in power has the skills to steer us back onto a financially sustainable path

It tells us a lot more than where welfare spending is today - it tells us that it is today more or less exactly where it has been for 5 decades and that the government have, rightly or wrongly, put huge efforts into keeping it that way. I haven't argued anything beyond pointing out that the repeated assertions that it's spiralling are false. That the need for greater welfare spending is another matter.

Sustainability is about addressing known and predictable long term challenges before they become crises, not waiting until you are forced to ask, "Where is the money going to come from?" Which is currently where we are with the state pension. The birth rate started falling c1965. Successive administrations have had decades to plan and deal with it but they chose to kick the can down the road rather than make the medium and long term changes needed to keep it sustainable and reduce dependency on the state.

Successive governments have been addressing the situation - they've done all sorts of things eg, they've increased the pension age, enforced laws to ensure employers contribute higher amounts to pensions, encouraged the provision of greater private provision. Whether or not it's to anyone's satisfaction is another matter but they've made and are continuing to make many efforts to address the situation. They've also reduced various areas of working age welfare so more can be spent on pensions.

As for Novara Media, that bastion of neutrality... It's openly on the left, so it's hardly surprising that they selected a carefully curated clip.

I know nothing about NovaraMedia but the clip appears to be an unedited segment from Sky News in which an economic expert who has worked for the government corrects the incorrect assertion that welfare costs are spiralling. I think it stands alone as a source regardless of who posted it.

TLDR: You may not like the use of the word "ballooning", but welfare spending is rising and, on the current trajectory, it is not sustainable. A snapshot taken out of context is no substitute for robust, sustainable medium and long term planning.

You acknowledged yourself that it isn't ballooning where you said that Factually, he isn't wrong depending on what figures you use for welfare. Given you haven't provided sources for any alternative comparisons it's hard to determine the basis on which you're still trying to argue that spending is in fact ballooning. I will look at them if you have them though? The source I provided isn't any sort of snapshot taken out of context. It's an economic expert who has studied the government data over the last 5 decades and is confidently asserting that they show that welfare spending is not spiralling.

Where we maybe agree is that there is and will continue to be rising pressure for more welfare spending and yes, that is a massive problem that needs to be solved. We won't solve it by repeatedly misrepresenting it though as the government seems insistent on doing.

I am disappointed about the rumours in the press he is appointing Mahmood.
Mumsnet isn’t a good place to discuss taxes these days. A number of bots and plenty of people who’ll lobby for the richer people in society, plus Reform members.

Wealth tax off the agenda? Sigh. He's going to be another Starmer. They’ve got to him already, the right wing of the party. After all that election fuss. So just regionalism, then, whatever that is. Sigh again.

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 .

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

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.

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.

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

Taxing turnover? Do you actually know what turnover is!

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

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.

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

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.

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

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.

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.

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!

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.

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.

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 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.

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.