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.

I agree. But unfortunately even if parents pay maintenance, it’s not taken into account for benefits

But it won't be the super wealthy that are paying.

IMO, the problem is that Labour has run a very effective smear against workers earning above £39,000, portraying them as the "broad shoulders" who should carry an ever-greater share of the tax burden that they somehow caused. A lot of people seem to have bought heavily into that narrative. Personal responsibility is out and entitlement is in. People quite rightly take umbrage when those on benefits are called scroungers, but it's a two way street. I've seen thread after thread on here arguing that people on benefits should be able to enjoy the same purchasing power, lifestyle and choices as those who work, and that the answer is simply to tax people earning £45k or more. After all, those posters and their supporters could only dream of earning that kind of money. Aren't luck and legs ups the real reasons for the earning disparity ? Should anyone be paid more than a nurse?

Surely one of the incentives to work, along side the physical and mental benefits, is that it gives you greater financial freedom and more choices. If work no longer brings a better standard of living, where is the incentive?

So now many people see £50k a year as wealthy, and at £100k you are effectively a trillionaire! I'd like to think at least one political party would have the creativity and backbone to go after the genuinely super rich. But the super rich are tricky, whereas workers earning £40,000+ are not. They are generally less mobile and are easier targets, with savings, assets, pensions and homes that are generally not held in complex tax structures.

I'm not sure where a country has to go when, for convenience, productive working people are held up as the problem and then used as a piggy bank, whilst the government takes three or four or more bites out of the same already-taxed money, all whilst ring-fencing its own profligate spending.

I am all for paying taxes, effective wealth redistribution and an efficient welfare state. But that's not what we have. What's the point of planning if the sacrifices you make to achieve some modest security in your later years, and to reduce your dependence on the state, are simply going to be taken away from you by Dick Turpin masquerading as Robin Hood?

This is a very well thought through and well explained post. Thank you. As one of those people I completely agree, as do many of my friends and colleagues.

Regarding taxing the super rich - the super rich don’t keep their money as great piles in the bank. Their wealth is in the shape of businesses that employ people. If you own, say, a £500 million business how do you pay tax on that wealth without shrinking the business? And why would you when you could move that business and all the jobs it creates abroad? Why would you continue to live in the UK when you could remain super wealthy and live in Monaco?

Even Tony Blair warned against taxing the wealthy more. As PP said, it’s easy for them to leave the UK. Then the UK’s tax take is lower. This leads to:

Further tax rises, or
Cuts to public services, or
Higher borrowing

Maybe all three at the same time.

My priority would be to reduce wastage.

As for equity in housing, that can only be released if people down size. Plus part of the equity is inflation as opposed to actual growth.

A lot of people also confuse a large profit in absolute terms with an unreasonable profit. They see a profit of £1 billion and say that is totally unreasonable and should be subject to a windfall tax without considering it might only represent 2% growth on all the money invested. And who would take the risk of investing if a 2% return is punitively taxed?

The biggest shareholder of these large businesses are often pension funds. That 2% return is what funds the pensions of millions of people across the uk. Taxes and government interference in pension funds has led many businesses to collapse due to pension liabilities, leading to those pension liabilities (with significance loses to the pensioners) becoming another drain on the public purse.

2p on income tax would be a good start.

And spend the money on properly funding benefits.

What do you mean ‘properly funding benefits’? You mean people on benefits taking home more than those working to paying the extra 2pm on income tax?

And what would you tell the unions when nurses, teachers, cleaners, bin men, carers etc ask for a pay rise to compensate for the reduction in their take home pay?

Absolutely nothing. The country has to start living within its means.

headline in the times yesterday- there’s 100k people on out of work benefits for ADHD. 6 out of 10 young people are NEETS. This is a travesty. Money should be spent supporting these young people into work and undoing the damage the min wage and NIC changes did to youth employment.

I'd like to see him implementing a local income tax with different tiers for different goods and services. The benefit system has to be looked at - it's not sustainable in its current form - and the phasing out of cash.

This. I’d like to see a move to land tax rather than council tax, and wealth tax on the super wealthy - see C4 documentary tonight.

What do you mean ‘properly funding benefits’? You mean people on benefits taking home more than those working to paying the extra 2pm on income tax?

Good question. Working must pay more than benefits. If it doesn’t, there’s no incentive for people to work.

I was a bit shocked by that ADHD story as well.

There definitely seems to be a theory, and I have to say my personal experience backs this up, that there are some who are 'gaming the system'.

The whole 'Amazon must pay their taxes' argument is so dumb.

They employ 75,000 people in the UK and pay several billions of pounds every year in tax.

Many homes and even business are now dependant on them.

We need them FAR more than they need us.

@DeftPlumLurker

that there are some who are 'gaming the system'.

It’s been happening for as long as I can remember. When I was a child, two of my father’s siblings were better off claiming benefits than he was working for the NHS.

I have a cousin who has three children from different fathers. The child maintenance alone exceeds £2K a month. Then there is UC.

The mind boggles

Agree with earlier poster talking about CMS and making fathers pay a fair amount. I get really cross when a poster wants or has to leave a partner or spouse and the immediate response is to claim benefits. If the father has gone totally AWOL there’s often no alternative at least temporarily. But the practically bankrupt state shouldn’t be paying, the non resident parent should be. Other countries annexe support through the PAYE system or equivalent.

Also agree with poster about care for the elderly. It needs to be tapered at least, those who have saved get taken to the cleaners, those who for one reason or another haven’t any assets get care paid for. I do wonder why we bother.

Hmm - I don't think that would work out too well for say Blackpool or other areas of high unemployment and high benefits.

This is a classic issue - a company bases itself in a country with a low tax regime (and that country receives significant tax income from such companies as a result of that tax regime) but pays some tax in another country where they operate. Then the country in which it operates rather than saying ‘clearly we should have lower corporate tax regimes to encourage them to base themselves here’, says ‘let’s tax them even more so they move more of their operations overseas’.

CMS needs an overhaul. Seems to be easy for non-resident parents to duck out of paying their dues. Self employed and those working through limited company can run rings round the CMS.

If the non-resident parent leaves the UK, it’s extremely difficult to receive child maintenance. There is something called REMO, but I have never heard of anyone using it.

Good point about care for the elderly. My father has been in care for the last 7 years a cost of £1550 per month. His state pension and NHS pension covers that.

His younger brother, who had claimed benefits since age 38, ended up in the same care home for free.

LA's are paying through the nose for SEN provision because those very same LA's closed all the specialist schools, while wanging on about "inclusion" being best for children. It also happened to be cheaper, of course... unfortunately the children who absolutely needed specialist education then, still need it today. They just have nowhere to go now.

My DS school costs much more than that fwiw. I'd still prefer him to attend the local primary for free, but that will never happen.

Whilst I fully agree with your sentiment in going after Covid loan fraud (the scale of the fraud was at least close to £11 billion), sadly I think it will cost more to recover it than it would claw back.

Much of £11bn Covid scheme fraud 'beyond recovery', report says https://www.bbc.co.uk/news/articles/c075vjxyx3no

Why not?

If you want to increase the money available to run the state, why is your question how to increase taxes, when increasing growth will do the job much better?

The question should be what at he can do to increase growth.

And one of the best ways to increase growth is to cut taxes!

The simple answer is that if you invest money you take a risk that you may lose on your investment. Whereas if you work you take no risk on your hours - you still get paid regardless.

And a basic rule of finance is that the higher the risk then the higher the return and vice versa. As for the rebate on losses this only applies if you subsequently make a profit in future, you don't automatically get the money back, whereas if you make a capital gain then you are automatically taxed.

If you Capital Gains tax businesses or investments at the same rate as income then you remove the incentive to start businesses or invest thereby slowing the economy for everyone.

Perfectly put!

The amount it would cost Amazon to keep operating here but move key infrastructure to somewhere like Ireland is far, far less than they would have to pay in the sort of tax rises people are demanding.