Reply to: October Budget is "going to be painful", Starmer warns

[Protagoras]

I hope it will be very difficult for Labour to removed this completely but they might well reduce the limit to say £100k. And of course we all know they think anyone with a couple of shillings in their back pocket is considered 'wealthy' and must be taxed to the brink of extinction.

Quite a few suggestions around that the cap could be reduced, and rumours of reduction to 20%.
Never mind that people have be planning retirement for years under current arrangements.

Even worse, if taking the lump sum was to trigger the reduced MPAA.

[ChimpMaster]

People I know are planning to take the 25% in the next month to mitigate that risk and also the risk that the limit is reduced.

The maximum tax free cash you can take across all your pension arrangements is £268,275.

It was of course quite a bit higher when the Lifetime Allowance was higher, for example £450,000 in 2012.

I hope it will be very difficult for Labour to removed this completely but they might well reduce the limit to say £100k. And of course we all know they think anyone with a couple of shillings in their back pocket is considered 'wealthy' and must be taxed to the brink of extinction.

[Protagoras]

There is no way they will have the balls to claim income tax on the 25% lump sum ... that would be a step too far.

People I know are planning to take the 25% in the next month to mitigate that risk and also the risk that the limit is reduced.

[vetran]

Wouldn't they have to up the minimum wage massively for no one to lose out by the removal of WTC (being replaced by UC)?

Remember, anything that's likely to make people who might vote Labour worse off, is much less likely to happen.

Probably but it needs doing.

[woody1]

They could remove the multi national company subsidy known as working tax credit and up the minimum wage.

Wouldn't they have to up the minimum wage massively for no one to lose out by the removal of WTC (being replaced by UC)?

Remember, anything that's likely to make people who might vote Labour worse off, is much less likely to happen.

[vetran]

That's the problem. A lot of taxes are circumventable either by "tax planning" or, as you say, simply leaving the country.

At least if they increased employment income tax/NI or VAT, they'd collect most of the projected revenue. Hike other taxes and there might be a substantial shortfall as people find ways of avoiding/mitigating them.

Indeed when they start squeezing they will find the fruit has gone!

They could remove the multi national company subsidy known as working tax credit and up the minimum wage.

[woody1]

The rich are mobile, they will leave until the tax changes.

That's the problem. A lot of taxes are circumventable either by "tax planning" or, as you say, simply leaving the country.

At least if they increased employment income tax/NI or VAT, they'd collect most of the projected revenue. Hike other taxes and there might be a substantial shortfall as people find ways of avoiding/mitigating them.

[vetran]

Yes but I bet the well-off minority (traditionally Tory voters) will be hit the hardest.

The rich are mobile, they will leave until the tax changes.

[NotAllThere]

Yes but I bet the well-off minority (traditionally Tory voters) will be hit the hardest.

It'll be the (Tory voting) poor country folk who'll be hardest hit. At least in the Home Counties.

[woody1]

They will affect everyone in one way or another. For example they look like restoring the fuel duty tracker that's been frozen for several years. What impact does adding 5p per litre across the board have on the man in the street do you suppose?

Yes but I bet the well-off minority (traditionally Tory voters) will be hit the hardest.

[malvolio]

As a swivel-eyed loon with no allegiance to any Party, what strikes me about Labour's taxation policy is that it seems to revolve around divide and conquer.

"Psst, that guy over there has two houses"
"Oi, that lady sends her child to a private school"
"Mmm, that guy has a chunky ISA/Pension"

It seems to be about pointing the finger at a small group and milking them to raise taxes, upsetting a few but gaining approving nods from the masses.

To me it seems sneaky - I don't doubt there's a deficit, and we've already all felt the effects of fiscal drag which is in itself quite a painful taxation of the middle seeing as once upon a time, higher rate tax payers were the preserve of the extremely wealthy 1%, but the obvious solution is a % rise on income tax / VAT / whatever, instead of rising lots of little taxes that affect small groups of people. It seems quite a transparent ploy to divide and conquer, and thus raise taxes without getting widespread disapproval.

I also suspect a lot of what's been proposed is short-sighted:
- VAT on school fees - shrinkage of aspirational middle sending their kids to private school, so that they truly do become the preserve of the rich, and a swelling of numbers into the state sector.
- CGT - shortage of rentals / rents going up.
- Taxing ISAs/pensions - discourages saving for retirement, increased reliance on state pension which is likely to reduce in real terms as time goes by.

Over-engineered transparent attempt at populism - whack a 1 or 2% charge on income tax or whatever and be done with it.

Not populism, simply Socialism writ large.

Except the general idea is to move money from the working man to the working union member (quite a lot of whom aren't actually working at all...), as opposed to the original idea where the wealthy person's money should be moved toward those less fortunate. A fine idea in the early 1900s when the gap between rich and poor was significant and there wasn't a welfare state* of any kind, to today when it really isn't.

But it is the disconnect between what they are saying they are aiming to do and the measures they are proposing which will actively stop that happening that really sticks in the gullet.



* And, of course, we must acknowledge that it was largely a Labour government that created the welfare state from scratch. Shame it is now used to support people not to work at all for a host of largely imaginary reasons.

[fiisch]

As a swivel-eyed loon with no allegiance to any Party, what strikes me about Labour's taxation policy is that it seems to revolve around divide and conquer.

"Psst, that guy over there has two houses"
"Oi, that lady sends her child to a private school"
"Mmm, that guy has a chunky ISA/Pension"

It seems to be about pointing the finger at a small group and milking them to raise taxes, upsetting a few but gaining approving nods from the masses.

To me it seems sneaky - I don't doubt there's a deficit, and we've already all felt the effects of fiscal drag which is in itself quite a painful taxation of the middle seeing as once upon a time, higher rate tax payers were the preserve of the extremely wealthy 1%, but the obvious solution is a % rise on income tax / VAT / whatever, instead of rising lots of little taxes that affect small groups of people. It seems quite a transparent ploy to divide and conquer, and thus raise taxes without getting widespread disapproval.

I also suspect a lot of what's been proposed is short-sighted:
- VAT on school fees - shrinkage of aspirational middle sending their kids to private school, so that they truly do become the preserve of the rich, and a swelling of numbers into the state sector.
- CGT - shortage of rentals / rents going up.
- Taxing ISAs/pensions - discourages saving for retirement, increased reliance on state pension which is likely to reduce in real terms as time goes by.

Over-engineered transparent attempt at populism - whack a 1 or 2% charge on income tax or whatever and be done with it.

[malvolio]

Who knows but they will put up a load of taxes.

These taxes probably won't affect the vast majority of people who voted them in.

Unfortunately, it does mean that quite a few here will need to lube up.

They will affect everyone in one way or another. For example they look like restoring the fuel duty tracker that's been frozen for several years. What impact does adding 5p per litre across the board have on the man in the street do you suppose?

[woody1]

You think New Lie 2.0 will fix it??

Who knows but they will put up a load of taxes.

These taxes probably won't affect the vast majority of people who voted them in.

Unfortunately, it does mean that quite a few here will need to lube up.

[vetran]

It was well known, long before the election, that the public finances were shot, and that taxes would have to go up, but it was the elephant in the room that unsurprisingly neither the Tories or Labour wanted to talk about during the campaign. Labour are being disingenuous claiming they didn't know the scale of the problem but what do you expect from politicians. In a way the Tories have dodged a bullet by losing and not having to deal with it.

You think New Lie 2.0 will fix it??