That 22bn

Er, Danny Blanchflower was a longstanding member of the Bank of England’s MPC and is currently professor of economics at Dartmouth College, New Hampshire.

Let’s use austerity to fix the problems created by austerity.

You can’t make it up.

(I’d be happy for this to be in the Starmer thread!)

Er, Danny Blanchflower was a longstanding member of the Bank of England’s MPC and is currently professor of economics at Dartmouth College, New Hampshire.

Yep. And he’s openly honest about how he supported Starmer and is now appalled by what’s going off.

Good graph that Rone. ^^Interesting.

Basically tells a story (to me) that the banks **** us in 2009 and we’ve never recovered.

Enjoy your wreckless government then.

Ironically, after 14 years of the Tories wrecking the country in every possible way, I’m quite looking forward to a “wreckless” government.

But I don’t think that’s what you meant.

(Wink emoji here)

Anyone that thinks the (properly) rich will be squeezed, give your head a wobble.

It’ll be the middle earners that get dry bummed the most, the easy targets

And as for getting excited about an increase in fuel duty. You do realise that this will give rise to the cost of household goods? But this won’t be a rise in line with the increased fuel costs, no, it’ll be a greedy money grab by the big supermarkets et al – see recent energy crisis price hikes leading to massive inflation driven by greed and reflected in company profits. So austerity, plus tax rises, plus inflation, plus interest rate hikes. Happy days

It’ll be the middle earners that get dry bummed the most, the easy targets

Median household income (after direct taxes) is around £32k, which I suspect is less than the STW view.

you’ll get more tax up-front out of savings that are made, and you will discourage savings among high earners, which will make people spend more (boosting the economy).

So as one of those who falls into that bracket, here’s what will happen:

1. I’ll go (more) part time, so less money overall goes into the economy.

2. I’ll just drop the money into salary sacrifice schemes (Cycle To Work, electric vehicle etc). If pensions are going to be taxed in and out, I’ll have the shiny new bike now, thanks.

If they fix the marginal rate issue then I’m actually fairly ambivalent about paying more tax, but I dislike being in the situation where I suffer nights out of bed and get taxed at 62% for the pleasure.

I would also expect this to be distributed fairly if it’s on pensions with a proper calculation of the value of public sector final salary pensions and appropriate tax.

Are we all in it together (middle to high earners?). Or is it just the private sector employees who are fair game?

I know this sounds like a horribly Tory perspective (and it probably is to be honest), but to clarify I don’t object to a higher tax burden in principle.

It’s perfectly fair to tax existing pensioners, it’s entirely their fault we’re in this mess.

I would also expect this to be distributed fairly if it’s on pensions with a proper calculation of the value of public sector final salary pensions and appropriate tax.

that’s tricky to do as a defined contribution pension varies in value as markets fluctuate, whereas a defined benefit pension doesn’t. Annuities were in the doldrums for years (~3% per annum income) wheras they’re much stronger now since interest rates perked up (~7% per annum if you’re retiring at 68) – so the equivilent value of a defined benefits pension has halfed. I can’t see a fair way of taxing those two outcomes – you’d end up with massive swings in taxation as people are about to take their pension which would be a worse outcome than the unfairness we have today.

its an interesting graph, but slighly skewed as the axis is linear. If it was to show spend as a percent of receipts, it doesn’t look like we’re that much higher now than we were in ’95 – which is also confirmed by the graph on page 5 in here

https://researchbriefings.files.parliament.uk/documents/SN06167/SN06167.pdf

Are we all in it together (middle to high earners?). Or is it just the private sector employees who are fair game?

Private sector? Any public  sector workers will be fair game as well.

The exceptions will be the really well paid in either public or private sectors with bespoke contracts/limited companies to avoid the pain.

Public sector pensions are a red herring as well. They get paid less today in return for the pension and most recent(ish) hires will be screwed over. Just like in the private sector where the DC pensions are kept for those who dont need them.

The chopper that Sunak used to nip to the shops to buy milk (I’m joking, he never buys his own milk) has been scrapped.

The whole black hole narrative is designed to reinforce into the nation’s psyche how bad the tories were so we all remember when we are voting again in 4 years time.

In terms of pensions and me personally I’m hammering mine to get enough squirrelled away quickly having had very little saved 5 years ago when I was in my late 30s, as someone mentioned above the 62% tax rate is gauling, if they remove the ability to delay the tax by paying into the pension then like Flaperon I will likely drop my hours at work and then in turn spend less too

Question on pensions. Assuming the rules are changed on LTA or annual allowance, presumably any unused allowance from the previous 3 years will still be available to max as it was governed by the rules at the time. Sound right?

My slightly draconian approach would be to start with getting rid of non dom status and they requiring everyone who holds a U.K. passport to be liable for U.K. taxes wherever in the world it’s earnt. If you want the benefits of  being a U.K. citizen and passport holder then should should be liable for tax. I’m happy to have a lower rate for overseas earnings but the principle should be upheld.

And suppose all holders of non-UK passports had to pay taxes to the countries where they also held passports that would mean a lot of money transferred overseas …

Didn’t the powers that be grab a shed load of money and assets off a bunch of Putin’s mates a little while ago? Surely we could dip into that a bit, or has that mysteriously disappeared?

kelvinFull Member
The chopper that Sunak used to nip to the shops to buy milk (I’m joking, he never buys his own milk) has been scrapped

£40 million contract wasn’t it? I’m surprised that didn’t get more mention? Or did I just miss it.

I’ve a few ideas that would not impact those on modest incomes or pensions…

– end all the non-dom and off–shore-tax dodges for starters.

– work overseas or squirrel away the company there ? Change the current 183-days threshold for having to pay UK tax, down to something like 20 or 30 days (**** me right off  how people go work in Saudi or Bahrain or UAE, and pay zero tax even though their families are still in Britain, still come back for medical treatment, etc)

– all the tax dodging having a company reg in Jersey or Guernsay  or IoM (think of all the Tory MPs and donors doing it that)..

Inheritance on mansions and hundreds of acres – need to stop (and reverse !) all the Inheritance tax dodges of the landed wealthy who use trusts as a means of  dodging tax.

– sack off the Royal family and take all that land back into real public ownership – the income will help fill a hole.

– take all the land owned by historic estates (land stolen from the masses and given to cronies in the last 500 years, and mainly 17+18th century) and either take the £££ income they get from rental etc, or better still, stop paying farmers the subsidies that then get paid as rents to these mega-landlords  (take my local Chatsworth estate – tenant farmers pay a shed load to have the farms, yet that money comes from….yep….subsidy. cut the subsidy and just let them farm the land instead for free !(like 300 years ago!) All we have at present is tax payer money going into mega rich land owners coffers !

And DEFINITELY tax all cars weighing over 2 tonnes for the increased road damage they cause.

If you want an environmental tax, I would tax both employee and employer an extra 1% (of employee income) each if the place of work is more than 10km from home.

If you want an environmental tax, I would tax both employee and employer an extra 1% (of employee income) each if the place of work is more than 10km from home.

Do I get a discount when I cycle in (which I do on a regular basis)?

Or when I work from home (likewise)?

Actually I can see an interesting tax dodge in your proposal @MSP – it might save me a bit getting to list me as being at another depot / site and I can claim for attending sites further away.

Can I point out that while public sector pensions are still relatively generous, this has been steadily reduced in the last 2-3 decades, and if it was all such a great deal, you’d all be rushing to come and join us in the land of milk and honey that is serving the public at the whim of our political masters.

Question on pensions. Assuming the rules are changed on LTA or annual allowance, presumably any unused allowance from the previous 3 years will still be available to max as it was governed by the rules at the time. Sound right?

Most likely. Labour have also stated that they will not reinstate the LTA. It wasn’t the LTA that was causing issues for Consultants, as I have mentioned, it was the Annual Allowance and absence of a real pension pot. I expect they will allow fiscal drag to increase taxable pension on drawdown. That will hit pensioners with a private pension, as their personal allowance is taken up with the state pension (which they will likely have maxed out based on 35 years NI contributions).

As I see it, the two politically most challenging high return generating options are an annual property wealth tax, and means testing the state pension. The latter is probably political suicide and would be history making for any government. Everything else is just tinkering at the margins.

IANAFA ;-)

And DEFINITELY tax all cars weighing over 2 tonnes for the increased road damage they cause.

Broadly speaking they already do that. On average a heavier vehicle will produce more emissions, and so pay more VED.

The only exception is for electric cars, which are very heavy (Relatively speaking) and pay little/no VED.

[robertajobb]

robertajobb

Absolutely, but what you’re proposing would require nothing short of a revolution.

Introducing land value tax would turn this country upside down.

In fact, it’s probably one of the most critical and effective pieces of legislation that the UK government could make.

But, of course, it will never happen.

Ideas for finding some extra cash. Defiantly start with tightening up some of the rules around shell companies and the reporting of accounts. The ultimate beneficial owner should always be easily traceable. Petrol prices have dropped from their peak in 2022, so a small increase in fuel duty could be introduced. I’d like to see the council tax bands a valuations get a shake up (how many people are sitting in extended or refurbished properties in a lower band), this would be politically painful as there will be a percentage of households who look like they get unfairly treated.

I think the government will go for an increase/change to capital gains tax as an “easy” option.

Not a change that would necessarily raise money, but if you have a personal electric car for business use you can claim the full 45p mile tax free. At the same time, it’s possible to pay a low rate for charging your EV at work for business trips and for that not to be a benefit in kind. Some small businesses may be letting staff charge for free as a perk and it’s unlikely to be investigated?  I suspect only a small number of people are exploiting this, but as EV usage increases the confusing guidance on this will need to be resolved.

Gonna sound like a stuck record, but a couple or three years to fill the black hole?

Hannah Fry has a pop at the misguided and false idea of austerity and government debt.

https://x.com/TweetForTheMany/status/1806790339123945868

U.K. ?? National Debt is simply the “Private Surplus” <br><br>That means if government wants to reduce its so called national debt then it has to reduce private savings from you, me and companies. <br><br>That’s why economies go into recession under austerity. <br><br> pic.twitter.com/BArQP1bGZZ

&mdash; ℹ️ Not The Torygraph ? #SaveOurNHS #ScrapNHSBill (@TweetForTheMany) June 28, 2024

<script async src=”https://platform.twitter.com/widgets.js&#8221; charset=”utf-8″></script>

Introducing land value tax would turn this country upside down.

While I agree with the principle, it needs to be done better than council tax and business rates were. Both were based on valuation,  both created industries for ambulance chasers willing to waste millions of public money on spurious appeals (though loopholes have been tightened)

My Twitter link above appears to be broken so here’s a link to Hannah Fry’s 15min BBC radio show.

Thomas Herndon was happily studying economics at the University of Massachusetts, when one day is punctured by a discovery. It appears to be an anomaly which, if true, will shake the intellectual foundations of a global movement, and could undermine politicians around the world. Hannah Fry tells the extraordinary story of a student who will go head to head with two of the greatest economic minds in modern times. But can he win?

https://www.bbc.co.uk/sounds/play/m001r1s4?partner=uk.co.bbc&origin=share-mobile

You do know that even taking into account all the errors he found (and there were some corkers) the actual conclusion of the paper – that countries with debt to GDP of over 90% grow less quickly, held. It wasn’t as startling as before – obviously, but the authors were still right, and Herndon’s corrections proved it.

But this is theoretical economics, politicians decide on what they want to achieve and use whatever they can find academically to back it up, not the other way around.

Heres Richard Murphy laying into Starmer/Reeves, very good

Which Rachel do you prefer – the current one or this one from 4 years ago?

Austerity has failed.

If you stunt growth by cutting government spending, discouraging businesses from investing and allowing productivity to stagnate, you choke off the growth that we need to raise living standards. pic.twitter.com/l1MRFzIFbh

— Rachel Reeves (@RachelReevesMP) March 12, 2020

You guys think the government needs to find money?

Are you oblivious to the fact that it easily found nearly 400bn in 2020?  Did your taxes need to rise substantially to pay for it?

No they didn’t.

Once more for the reality check.

The government has its own bank (BoE).

All payments to the public sector are made from a zero balance every day at the consolidated fund. No private sector borrowing takes place to make this spending happen.

The Consolidated Fund (government’s current account) draws upon a line of limitless government credit – and money is created and spent into existence every single day through an act of parliament.

Once the spending is agreed it is happening and there is no way the BoE can refuse it.

At the end of the day the HMRC account at the BoE takes the tax receipts and offsets them against the CF.  Creating a negative balance or a positive balance.

If the government spends more than it takes in – bonds are issued to match that deficit. These bonds exist as a safe space for the private sector to put interest bearing money. After all, bonds are 100% safe – with no limit unlike cash which can only be guaranteed to 85,000.

There is a good demand for bonds. These make up what we call the national debt but they are really the nation’s savings. (Premium bonds make up part of this )

But they aren’t necessary for spending.

When we talk blackholes or things that don’t match in government spending we are simply pointing something out on paper that is a normal function of spending – that is to have a deficit so the private sector can have a positive flow of cash.

Conversely there have only been 5 surpluses in the UK in the last 50 years because they mostly lead to contractions or recession because you are removing government money from the economy.

Reeves and Co are being badly advised about how the government finances itself – and this is at the detriment to us.

You can spend time adding up or removing tax receipts but they are not the limitation on government spending.  And there is no black-hole that is a problem here.

The tax system does do other things and we need to re-jig it to redistribute the power and control that the wealthy have over the nations resources. Etc

Tax also exists first and foremost to give currency value and create a demand for the government’s money. You have to earn money to pay your tax liabilities.

Here is a peer-reviewed paper, and the only extensive research ever done into UK governmental finances for the full picture.

Peer-reviewed version here pending publication in Journal of Economic Issues…https://t.co/3vgFQXlLZp

— Andrew Berkeley (@spatchcockable) July 28, 2024

It’s nothing to do with Richard Murphy – so Argee can sleep easy.

It’s nothing to do with Richard Murphy – so Argee can sleep easy.

Not quite, I notice they have hast tagged MMT so still a bug trigger there for the ignorant.

Not quite, I notice they have hast tagged MMT so still a bug trigger there for the ignorant.

That’s because MMT people will refer to it – hence the retweet.

But the research was done without MMT informed language for obvious reasons.

(Murphy is not actually an MMTer – but he knows how government finances work, he can be a little antagonistic and contradictory but he’s a force for good.

He was on Radio 2 making a bit of a hash of things yesterday, to be honest.

But I do like his passion and commitment to it all and he’s got a certain mindset on how to put things right – that he communicates well.)

You guys think the government needs to find money?

I think you’re being disingenuous, and you know it. This govt don’t need to do anything. They can point at the previous govt and say “These folks can’t add up, and worse than that, they lied about it” As you know, the day to day departmental spending is decided each year and made into law when the budget is passed, the money comes from the BoE and is spent. Every ‘western’ govt tries to balance departmental spending with revenue, it’s just good discipline. Again the question is  –

Why would a Labour administration vote on an amendment to the budget to correct the bad maths of the Tories by creating the money to cover any shortfall?

As for the budget that’s coming in October, that’s a whole different thing, and I reckon that while Starmer’s govt talks a good game with plans to reconstruct, unless you spend the money to make that happen, then it’s just hollow words. They seem ambitious, but at the moment don’t seem to want to back that up with proper spending. I can understand the claim that they need the growth in the economy to make the space for spending and taxing, but at some point, you’ve still got to put up.

Double the threshold on NI payments , we all know it goes in the same pocket as income tax so let’s stop pretending it’s put in a mattress .

IHT . You pay tax on what you get at your current rate. If you pay nothing, then you get taxed at the band the amount puts you into.

NHS . Customer to pay 10% of cost of treatment , either via loan , insurance or savings. Sorry but the Tories stole the ability to run a government funded system.

Air travel , tax that per mile . It’s individualy one thing we can do to reduce our carbon footprint. It’s a choice.

Alcohol tax has to rise , ditto cigarettes. Luxury items and are non essentials, fill the hospitals unnecessarily.

Vehicles. All electric vehicles are to pay £200 rfl. They are heavy and wear out the roads as much as everyone else. And yes I know rfl goes in the same pocket as vat , ni etc . Petrol and diesel to go up a penny a litre.

Vat stays same for now. But I would bring in some of the swervy vat exemption stuff to increase revenue.

I would welcome escalating taxes on things like airtravel and fuel.  So those who consumer the most pay higher tax % to incentivise using less.  Bit like how income tax works with bandings.

Would need black boxes on all vehicles, which I’m also in favour of, with the ability to auto fine for speeding….

That would be a juicy tech project for us to outsource to some consultants who would charge billions….

All electric vehicles are to pay £200

From 2025 it’s going to be more than this, I think.  Retrospective changes to fix the problem with old diesels getting away with paying £30/year needed too. I also don’t see why the congestion charge couldn’t be tripled or quadrupled in London, it’s the only place in the country with passable public transport. In fact, maybe make it proportional to the value of the car to deal with the ultra-rich driving like knobs in their gold-plated Lambos around central London.

Proper pay per mile that beats someone to death (err, financially) for doing journeys less than a couple of miles.

Fix the railway network before imposing tax on family holidays. Besides, thanks to more than a month of rail strikes the extra road traffic has released far more CO2 than could ever be reasonably avoided via tax on flights people take less than once a year.

Oh, and ban Krispy Kreme deliveries to the US embassy until they settle their congestion charge bill.

via tax on flights people take less than once a year

As many people have said, aim the tax at frequent flyers.

 I notice they have hast tagged MMT so still a bug trigger there for the ignorant.

I’m not ignorant, but MMT still triggers me. At best, it’s a plan for a very specific set of circumstances, it’s not a co-incidence that it became popular post the Covid-19 slump. Even supporters of MMT point out that few western govts – unless suffering very precise sort of shocks, are not nearly at a place currently where a policy like MMT would be a first option.

Anyway it’s all hot air, like any economic theory it’s only use is as a support for any ideological choices that a govt make in order to lend the cover of authenticity to their decisions.