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Taxes

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    Taxes

    "Sky's Ed Conway points out that the higher-than-expected deficit in March (it rose 20pc to £5.1bn) and weak income tax receipts are "another sign that the economy may have slowed" in the first quarter."

    World stocks hit all-time high for second straight session as Macron rally continues; UK deficit falls to lowest level since 2008

    January 2017 was good because of higher dividend paid before new punitive rate kicked in, then inevitable drop...

    Bring back 50% tax to fix it!

    #2
    Originally posted by AtW View Post
    Bring back 50% tax to fix it!
    On bedsits?

    Comment


      #3
      "higher than expected deficit" and "lowest deficit since 2008"... OK then.

      This year's cut in Corp Tax from 20% to 19% will see to it that the deficit will go up. Income Tax, NI, VAT and Dividend Tax to go up and cut in the higher rate threshold to fund the CT drop no doubt.

      But at least the Tories say they are the party of low tax so that's OK then. We don't need the detail, just vote for them blindly.
      Taking a break from contracting

      Comment


        #4
        Originally posted by chopper View Post
        This year's cut in Corp Tax from 20% to 19% will see to it that the deficit will go up. Income Tax, NI, VAT and Dividend Tax to go up and cut in the higher rate threshold to fund the CT drop no doubt.
        Last year CT receipts were £44 billion. A cut from 20% to 19%, in a vacuum, would reduce revenues by £2.2 billion.

        The change will increase after-tax profits, which will in most cases either be reinvested, creating more economic activity and more revenue, or disbursed as dividends, resulting in revenue from dividend tax and, in many cases, more economic activity by the dividend recipients. The next effect is probably less than a billion pounds in revenue, by the time you figure increased dividend tax and increased employment tax revenue.

        If the trend towards lower corporation tax draws more investment into the UK, it will probably be revenue-positive.

        Comment


          #5
          Originally posted by WordIsBond View Post
          Last year CT receipts were £44 billion. A cut from 20% to 19%, in a vacuum, would reduce revenues by £2.2 billion.
          And so another £2.2bn in 2020 when it goes down to 18% then?
          resulting in revenue from dividend tax and, in many cases, more economic activity by the dividend recipients.
          Who live overseas and therefore don't pay dividend tax.

          We send the EU £350m a week.
          Lets fund the cut in Corporation Tax instead.

          I found this quite interesting, actually
          https://www.gov.uk/government/upload...able_Final.pdf
          Taking a break from contracting

          Comment


            #6
            Originally posted by chopper View Post
            And so another £2.2bn in 2020 when it goes down to 18% then?

            Who live overseas and therefore don't pay dividend tax.

            We send the EU £350m a week.
            Lets fund the cut in Corporation Tax instead.

            I found this quite interesting, actually
            https://www.gov.uk/government/upload...able_Final.pdf
            Yep, another £2.2bn in 2020. So a total of £4.4 billion. It's really a drop in the bucket.

            That table is very interesting, and it shows where the real money is. Income Tax, National Insurance, and VAT. If you slash corporation tax and it encourages companies to locate here, you give up a few billion but you generate far more in IT, NIC, and VAT. The only real reason to keep CT up is political. Fiscally and economically, you'd be better with a higher dividend tax and a lower CT. You'd lose some income from dividends that go overseas (as you noted), but most dividends stay here. And the jobs you'd create would easily pay for it.

            A lower CT rate would also reduce tax avoidance / evasion. People would be slower to claim dubious business expenses if it only saved them 10% tax.

            Comment


              #7
              If £4.4bn is chump change, why chase the supposed £440m in the tax that we contractors are supposedly underpaying?

              Will we really go down as low as Ireland's 12.5% CT rate, or Hungary's 9% CT rate? Estonia have an interesting concept of 0% Corporation Tax, instead only charging CT once funds have been distributed (20%).
              Taking a break from contracting

              Comment


                #8
                Originally posted by WordIsBond View Post
                Yep, another £2.2bn in 2020. So a total of £4.4 billion. It's really a drop in the bucket.
                It's about the amount they've projected to get from increased dividend taxation, let's not forget here that those CT cuts resulted in massive dividend tax hike, overall it's at least as bad as it was when CT was 28%, but top rate of tax on dividends was mere 25% (like in Germany now).

                Comment


                  #9
                  Originally posted by chopper View Post
                  Estonia have an interesting concept of 0% Corporation Tax, instead only charging CT once funds have been distributed (20%).
                  This the most sensible concept IMHO - fair too, because you can make "profit" whilst having to spend it all on essential equipment for business, but they won't allow you full write off straight away (only up to level of annual allowance).

                  Comment


                    #10
                    Originally posted by chopper View Post
                    If £4.4bn is chump change, why chase the supposed £440m in the tax that we contractors are supposedly underpaying?

                    Will we really go down as low as Ireland's 12.5% CT rate, or Hungary's 9% CT rate? Estonia have an interesting concept of 0% Corporation Tax, instead only charging CT once funds have been distributed (20%).
                    The fictional £440m was never really about revenue. It's always been about "fairness" (i.e. propaganda). That's why they don't have to explain why it didn't change even after the dividend tax changes. It's a dreamed-up number used for manipulative purposes.

                    If we want to make Brexit really work we should go down to at least 15%. That's one of the few things Gidiot got right. But we should take it to 8 or 10% if we don't get a good trade deal. We'd better accept that, if we're going to Brexit, European economies are not our partners any longer, they are our competitors. And we need to really compete and give corporations a reason to locate here and hire here, and low CT rates is a very cost effective way to do that. If they aren't going to agree to a mutually beneficial trade deal, we should slash CT rates and economically cut their throats. Who is going to relocate from Britain (and 8% CT) for Germany's 30% or France's 33%?

                    And yes, £4.4bn is chump change. It's less than 1% of annual revenue. If you drop CT to 15%, you've cut only 2% of your revenue. Look at the table you linked to and see what happened between 2007-2008 and 2009-2010. The story is not how high CT rates are, but whether or not there is economic growth. When there isn't, revenue plummets (and social safety net spending increases, as well).

                    From 2010-2015 the corporation tax rate for large companies steadily dropped, more than 5%. CT revenue barely moved, but total revenue climbed steadily. Why? Companies were investing and hiring. VAT, NIC, and IT increased. CT is simply not important in the revenue picture. It's a sop to the idiots who talk about "evil corporations." If those evil corporations are hiring and producing goods or services that attract VAT, it's all good, even if a few individuals maybe do better than seems fair to other people. I'd rather see some lucky guy make £5m a year, even if he doesn't pay enough tax to be "fair" (however one defines "fair"), and hire 50 people, than see him leave for a friendlier tax jurisdiction.

                    This is basic economics. Anything you subsidise, you get more of. If you subsidise business by giving them lower tax rates than anywhere else, you'll get more business. And if you get more business, you get more employment and higher GDP, and employment tax and VAT are the big money makers. So subsidise business.

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