tories 20% VAT plan.

[centurian]

Did he?

I am sure that I saw their spokesman on TV saying that paying credits to people on 60K was absurd (and they'd be right!)

tim

What's the point of paying low earners tax credits - just don't take the tax off them in the first place...

[TykeMerc]

What's the point of paying low earners tax credits - just don't take the tax off them in the first place...

Perfectly sensible, how would you do that? Higher tax allowances for instance? It would certainly be a lot cheaper to administer than the tax credit system....

The drawback with higher tax allowances is that they apply to all earners (unless you set up a bureaucratic method to change the allowances depending on what people earn) which would be a tax cut for everyone.

I'm not defending the tax credit system, but it does keep the tax take up and saves some when people entitled don't actually claim because it's such a nightmare.

[Addanc]

Redwood argues otherwise.

[vetran]

Makes sense

Up VAT catch all the tax evaders. Up bottom tax limit rather than reducing headline rates.

cut costs.

[centurian]

Perfectly sensible, how would you do that? Higher tax allowances for instance? It would certainly be a lot cheaper to administer than the tax credit system....

The drawback with higher tax allowances is that they apply to all earners (unless you set up a bureaucratic method to change the allowances depending on what people earn) which would be a tax cut for everyone.

I'm not defending the tax credit system, but it does keep the tax take up and saves some when people entitled don't actually claim because it's such a nightmare.

Which is exactly what the government is doing next year. As people earn more than 100K, they begin to lose their personal allowance. In fact if you earn between 100-112K, you are effectively paying 61% tax on that 12K slice.

It would have been far simpler to just start the new 45% band (as it was at the time) at 100K instead of 150k. It brings in roughly the same amount of money - but then the personal allowance method was much stealthier, so are we surprised.

Even without this, you can juggle around the bands. Increase personal allowance to 10K, but increase basic tax rate to say 22% - maybe re-introduce the 10p rate to soften the blow for those on the edge.

But this would mean "raising the basic rate of tax" - even though few (if any) people would actually be paying more.

[MrMark]

What's the point of paying low earners tax credits - just don't take the tax off them in the first place...

I think that comment shows you may have little idea of how some people have to cope. Take for example a couple without work (more common than you may think) and one of them is offered part-time work paying £100 a week (thus not paying tax). Without tax credits they would not bother, as they'd lose their benefits. However tax credits would give them an extra £200 a month - still not a fortune, but would allow them to get back into the jobs market. As I mentioned before the Tories have stated they're not going to get rid of tax credits, but will look at the excessive cases where say a couple are earning 40k+ and still able to claim tax credits. I assume that in these cases a lot of children are involved.

[MrMark]

Up VAT catch all the tax evaders. Up bottom tax limit rather than reducing headline rates.

cut costs.

+1
There's a lot to be said for straight forward rules that are easy to implement and hard to avoid

[centurian]

I think that comment shows you may have little idea of how some people have to cope. Take for example a couple without work (more common than you may think) and one of them is offered part-time work paying £100 a week (thus not paying tax). Without tax credits they would not bother, as they'd lose their benefits. However tax credits would give them an extra £200 a month - still not a fortune, but would allow them to get back into the jobs market. As I mentioned before the Tories have stated they're not going to get rid of tax credits, but will look at the excessive cases where say a couple are earning 40k+ and still able to claim tax credits. I assume that in these cases a lot of children are involved.

That's because tax credits has also inherited what is effectively a benefits component. How can you be "credited" for tax when you haven't paid any (income tax anyway)

It should be possible to extract the benefits element of tax credits and pay it for what it is - a benefit. Then take the "credit" element out by not taxing low earners to begin with.

[HairyArsedBloke]

Just update the budget from 1996 allowing for inflation. Sack anyone in the public sector that was recruted since 1997.

Sorted - simples.

[Bagpuss]

20% VAT and road tolls, not really vote winners