[Closed] Put income tax up 1p* in the pound, solve austerity?

But your 1p wouldn't be ring fenced for this, it would just go into the big pot and get wasted on MPs expenses etc..

while I agree MP's expenses are a disgrace, I'm pretty sure they're not the primary expenditure from the big tax pot. Most of it is wasted on things like the NHS, schools and pensions.

Raising the basic rate of income tax by a penny in the pound would raise about £4-5 billion per year

Total government spending is about 750 billion annually, The deficit is running at about £100 billion annually

A penny on income tax is peanuts!

Edit: According to certain newspapers, austerity has cut spending by 35 billion (adjusted for inflation, spending in cash terms has actually increased year on year) so fag packet calculation is that you would have to increase income tax by seven pence in the pound....

Why does everyone say '1p in the pound' rather than 1%?

What we need is some nice inflation to make the deficit go away!

Can't have that though as it would be against EU rules and would cause pain and misery to homeowners.

^ what [s]he[/s] ninfan says.
It will take much more than a penny on income tax to deal with the gap in revenue and expenditure.

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http://www.economicshelp.org/blog/4001/economics/tax-revenue-sources-in-uk/
BTW - I recognise that this blog is out of date, and to be fair, assuming the actual figures are anything like the forecasts for this period, then the deficit is coming down sufficiently, but the outstanding debt isnt going to get any lower until that black line crosses the green line again. I dont think we need to be wiping out the whole debt, but some reduction would provide some head room for when the next fiscal crisis pops up in a few years time....

Pepper - while inflation will deal with the debt, it does nothing for the deficit.

Council tax in Scotland has been frozen for years, never goes up.
But councils seem really to be creaking - services are definitely being cut.
While forcing them to be more efficient is a good thing, I'd still be happy to have an inflationary rise in my council tax.

Most of it is wasted on things like the NHS, schools and pensions.

I don't think money spent on any of those things is a waste.
Money spent on subsidising low wages through tax credits however......

would cause pain and misery to homeowners.

1% on income tax
Collect Corp Tax
Stamp out online shopping from abroad STW must be contributing highly to a loss of VAT and import duty.

Wouldn't be political suicide in my opinion. Changing the system so that all businesses, large or small, pay a fair amount rather than going out of their way to pay as little as possible, that would be suicide.

What we need is some nice inflation to make the deficit go away!

Can't have that though as it would be against EU rules and would cause pain and misery to homeowners.

People with mortgages would benefit from inflation, it's savers that would have a hard time.

Why does everyone say '1p in the pound' rather than 1%?

Because it would actually be a 5% increase in income tax?

I think there should be a corporation tax floor for all corporations with t/o > £1m of, say 2% of t/o in the jurisdiction within which the economic activity occurs (i.e. not at a Luxembourg billing entity)

thekingisdead - Member

Most of it is wasted on things like the NHS, schools and pensions.

I don't think money spent on any of those things is a waste.
Money spent on subsidising low wages through tax credits however......

I wasn't being entirely serious. If the money is used inefficiently it can be wasted, but those are all things that I think are in principle a good use of my taxes. Probably should have put some speech marks round "wasted".

We just need to impose some austerity on our govt.

No overseas wars. No Trident. Dump the House of Lords.

And extra tax for employers that do not pay the living wage. They are bludging off the taxpayer because more tax is needed for welfare, so they should be the ones paying it.

Edit: and expel Scotland from the UK. 🙂

People with mortgages would benefit from inflation, it's savers that would have a hard time.

Well interest rates would go up so monthly mortgage payments would increase and savers returns too. So short term pain more of an impact to capital owed for most house owners and savers maybe stay the same overall.

Perhaps a comprehensive look at the entire system?
Stamp Duty paid by the seller not the buyer - collect from those who have got the most out of the price rises.
Corporate tax collection is the big one really, hopefully that one can get some worldwide momentum.
As car MPG is getting better each year raise fuel duty so the average cost per mile stays the same.

I think there should be a corporation tax floor for all corporations with t/o > £1m of, say 2% of t/o in the jurisdiction within which the economic activity occurs (i.e. not at a Luxembourg billing entity)

Would be againt EU free trade laws...

Now, there's a simple solution to that, but it's not particuarly popular round here 😉

Why does everyone say '1p in the pound' rather than 1%?

Because it would actually be a 5% increase in income tax?

Depends on the band(s) you fall into. A 1 percentage point increase would make sense, but possibly cause confusion - and would depend on the band(s) you fell into.

Well interest rates would go up so monthly mortgage payments would increase and savers returns too

The whole point of the initial comment was the recognition that inflation errodes debt. This applies not only to the country as a whole but also to individuals. Higher interest rates are a mechanism to try and control the money supply and hence inflation so if the intenet is to have a bit of inflation to ease the countries debt then the last thing you would do is increase interest rates as that would defeat the point of the exercse.

Stamp Duty paid by the seller not the buyer - collect from those who have got the most out of the price rises

Assuming you are limiting your discussions to the sale of property, doing away with stamp duty and applying CGT on the sale would seem to the simplest way of doing things.

I think there should be a corporation tax floor for all corporations with t/o > £1m of, say 2% of t/o in the jurisdiction within which the economic activity occurs (i.e. not at a Luxembourg billing entity)

There's an announcement later today for a 25% diverted profits tax to address exactly this point.

CGT on sale would stop some old people downsizing I imagine, though stamp duty isn't a good thing anyway IMO as reduces numbers of people moving house.

I pay tax on my wage
I pay 20% tax on everything I buy
I pay tax on my savings
I pay tax on my estate when I die
I pay tax on my fuel

All those people that chose to downsize, pay minimal tax and take tax credits because it works better if they have kids- why should we cover those?

We moan about those who dont want to work- but what about those that spot they can work less hours/earn less yet still get tax credits etc?

and now you want me to pay even more tax because the taxes that I'm paying aren't covering all the waste?

http://robinhoodtax.org.uk/how-it-works

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and now you want me to pay even more tax because the taxes that I'm paying aren't covering all the waste?

@flip, we have discussed this before. Yes in principal many of us would be prepared to pay more tax to improve public services. However in practice people don't vote for that when it comes to election time.

@Drac we in the UK are one of the few countries to have a financial transactions tax, its called stamp duty and is levied on share transactions. They don't have such a tax in the US or in the EU. The broader Tobin Tax (or populist name Robin Hood Tax) simply wouldn't work, you would have a financial market somewhere which would not implement it and most business would move there (Singapore, Hong Kong, Dubai ...). Also people don't understand how the markets / banking system works, for example (and an over simplification I admit) when you put £10 in the bank the bank doesn't know when you'll want your money back so they invest it / use it day to day. So that's 240 transactions a year, so with a .01% tax (sounds small right) that's 2.4% a year tax on your £10. Supporters of Tobin Tax just see the £2,400 in transactions your £10 generates and think let's tax that.

@mikesmith - charts like those are very misleading, in Australia you have huge natural resources and they can be taxed instead of individuals.

OP, also austerity really just means balancing the books, spending what you can afford. So you are of course quite right in that we can increase taxes to match higher spending. The complexity comes when that leads to a shrinking economy (business going abroad, people spending less as they have less) which in turn means less taxes.

They can and mostly we don't, it is accepted that some of the countries with better services have higher taxes.
Back here in Oz we pay less tax, have a partly insurance based health system and much more private education and still pushing to reduce government spending.
The UK also has a significant Oil resource that chips in 🙂

The UK also has a significant Oil resource that chips in

The UK isn't getting a lot of revenue from oil production at the moment.

and when it was over $100 a barrel?
One of those where it's time to have the honest national conversation about what is wanted as a nation and how to pay for it. The answer isn't everyone else.

Flat rate of 22% across the board. No loopholes. No allowances. You'll get more revenue and its a darned sight fairer.

Semi insured healthcare for those above a certain threshold. Massive cuts to those that don't contribute to society.

and when it was over $100 a barrel?

Oh yeah quite a bit then.

One of those where it's time to have the honest national conversation about what is wanted as a nation and how to pay for it. The answer isn't everyone else

Are you me?

No overseas wars. No Trident.

+1.

Trident replacement will cost at least £20bn.

Sadly Trident a must-have not a nice-to-have.

Today on the news talking about even local parks being abandonded by local councils due to budget cuts.

To get back to the OP ^; There are two reasons for this:

a) That particular authority has not managed its budgets reductions particularly well and that would be a drastic outcome. It would not be a favorable outcome in terms of their central gov or local targets, and action will be taken. This could be in the form of external or central gov help not counting out a cash injection / rebalancing of the books to assist. Funds for this kind of thing [i]are [/i]available in the form of application via business case but the general trend is that Local Gov officers are really poor at writing business cases or securing evidence for business cases. The mechanisms to help are out there, and they'll need to use them.

b) That they geniunly don't have enough cash and have been forced to reduce that service - see a) above.

It should be noted that although budget cuts are generilsed to a point, the expectation of outcome, performance and citizen satisfaction has increased and central gov WILL help if an authority is underperforming - they just can't ask for a bundle of cash and expect to recieve it any more, without evidential data and planning that proves the outcome/measure will be met or exceeded. Vis a vis much like a private organisation.

Krypton, you overlook the third option - 'the parade of the bleeding stumps'

[quote=antennae ]No overseas wars. No Trident.
+1.
Trident replacement will cost at least £20bn.

Over at least 10 years, so less than half the difference of 1p on income tax, or 2% of the current deficit.

Aracer, from what I've read it's a £20bn capex (at current prices) for an estimated 25 year lifespan (in service date 2034) of which about 2/3 is for the platform (ie. Submarines) the rest on infrastructure, missiles and replacement warheads

In service costs are estimated to continue at about 6% of defence budget throughout the lifespan (this includes AWE running costs)

Peanuts!

Krypton, you overlook the third option - 'the parade of the bleeding stumps'

The problem with that, is that many authorities are not only flourishing but exceeding there targets with this "new" way of working. Authority A is being advised to go an meet with Authority B if necessary to get advice. The knee jerk cash injection has gone, the "if you can't do it someone else will" attitude is here. If they want a job, they need to get with the program.

and now you want me to pay even more tax because the taxes that I'm paying aren't covering all the waste?

I don't see Trident as a waste of money, most of the money gets recirculated in the UK economy paying for R&D, manufacturing and then all the supports costs which benefit Faslane and the surrounding area. I know we buy the actual warheads from the US, but pretty much everything else is spent in the UK.

It's a good investment in UK R&D and manufacturing and the nice thing about Nuclear stuff is it doesn't get outsourced to the Far East for security reasons.

The last thing that needs to be done is to demand those of us that are stuck in the middle of things for an extra contribution when we've been squeezed both ends for the last 30 years! Just because our earnings are easy to track, our money is easily accessible via PAYE and we aren't wealthy enough to hide our wealth/earnings through numerous offshore accounts managed by clever accountants doesn't mean we should be picking up the tab.

Read these and see if you're still happy to volunteer to pay more tax:-

[url= http://www.equalitytrust.org.uk/about-inequality/scale-and-trends/scale-economic-inequality-uk ]economic-inequality-uk[/url]

[url= http://www.theguardian.com/uk-news/2014/may/15/britains-richest-1-percent-own-same-as-bottom-55-population ]theguardian.com britains-richest-1-percent-own-same-as-bottom-55[/url]

paying more from the same old people isnt the solution.

Reform the social security payment system. Its the elephant consuming your tax. £110 Billion - phew

http://www.ukpublicspending.co.uk/breakdown

and in terms of increase the graphs make intresting reading

http://www.ukpublicspending.co.uk/spending_brief.php

Does shifting Stamp duty to the Seller not Buyer change anything

Surely in tend its the buyer that pays anyway

If I'm selling my house today and it will sell for £250,000 and the buyer pays £5000 stamp duty. If the law changes then I'd charge £255,000 and the effect on both of us is the same

The house would still be valued at £250,000 so the buyer still couldn't use the mortgage to pay the tax

[quote=Pawsy_Bear ]Reform the social security payment system. Its the elephant consuming your tax. £110 Billion - phew

Reform = pay people less?

So presumably you'd argue that the benefit rates for those who consume most of that budget should decrease? Or should we find some permanent way to get rid of some of them?