The Lemon Fool

What can we expect from Labour on taxation?

"In an interview with Sky News, also in September 2023, Sir Keir was reported as ‘refusing to guarantee the tax burden – currently the largest since the Second World War – would not increase under Labour.’

He told Trevor Phillips: I want the tax burden to come down, particularly on working people … but I also am absolutely focused on growing the economy.”"

Seems somewhat contradictory but the tax burden will likely go up under Labour but come down for workers? so presumably go up for others? Would that be pensioners and investors?

We know taxes are set to increase a) vat on private school fees, b) remove non-domiciled tax loophole, c) crack down on tax evasion and avoidance.

However presumably peoples behaviour will change, the unintended consequences. Parents who can't afford the extra 20% plus inflation on school fees, will put their kids in state schools.

Non doms might leave the country, without capital controls. Talented executives may leave the UK. So these measures will take on less than expected

Cracking down on tax avoidance is being done by hmrc anyway. Tax avoidance is legal. Not sure whether this will bring in anything meaningful?

I'd guess they will announce shortly after bring elected that the finances of the country are worse than they thought, the Tories have wrecked the economy, and tax increases are required.

I'd expect next - the low hanging fruit - top rate of income tax back to 45%, remove higher rate tax relief on pensions, allign CGT rates with income tax rates, and double council tax on second home owners.

Later - possibles - wealth tax, land value tax increase business rates, council tax rises for home owners, increase top rate income tax to 50%.

I'd say these likely if going to "properly fund" public sector. Otherwise be no different to now undervthe Conservatives. Do you agree? Thanks, Adam

They will keep quiet about tax until they have won the election, if they can. I suspect there will be a struggle between those in the Labour party that want to raise taxes on the wealthy significantly, for the sake of it, even if the net effect is reduced tax take, and those like Rachel Reeves who (probably) want to do as Blair did and focus on growing the economy and not discourage wealth creation.

The French, as I recall, a few years ago tried to introduce very high taxation on the 'wealthy', and there was such an exodus that they had to cancel it. It doesn't take many rich people leaving (with a total loss of tax take from them) to offset higher taxes on those that don't go. But that fact is not of interest to the likes of John MacDonald.

(ps the top rate of tax is already 45% - or 60+% if you include the loss of personal allowance between 100k and 125k)

Likely does not matter Labour or Conservatives, taxes will need to carry on increasing as costs will keep increasing. They are all dishonest and will not come out and say, if you want X you need to pay y.

The UK needs the grown up conversation about what should happen re health/medical intervention etc as we all live longer, doctors have advanced medical frontiers over the last 50-60 years (not sure they ever asked the people if they could afford to support these advances) and the people of the UK need to decide what quality of life/ support/intervention they want and are they prepared to pay for that level.

If we want the super duper cradle to grave cover, anything to prolong life, we need to be prepared to pay for it, right now we all seem to want the free lunch and accordingly are disappointed when the NHS and Care services cannot deliver what we expect.

Adamski wrote:Seems somewhat contradictory but the tax burden will likely go up under Labour but come down for workers? so presumably go up for others? Would that be pensioners and investors?

or

windfall
huge earners

or a gazillion other things.

obvs

Charlottesquare wrote:If we want the super duper cradle to grave cover, anything to prolong life, we need to be prepared to pay for it, right now we all seem to want the free lunch and accordingly are disappointed when the NHS and Care services cannot deliver what we expect.

Yup. There is (and has been for a very long time) a general expectation of Scandinavian levels of social support but on US tax levels.

didds

didds wrote:

Charlottesquare wrote:If we want the super duper cradle to grave cover, anything to prolong life, we need to be prepared to pay for it, right now we all seem to want the free lunch and accordingly are disappointed when the NHS and Care services cannot deliver what we expect.

Yup. There is (and has been for a very long time) a general expectation of Scandinavian levels of social support but on US tax levels.

didds

and yet since 2005, there is no inheritance tax in Sweden (nor any gift tax), and since 2007, there is no wealth tax

scrumpyjack wrote:

didds wrote:

Yup. There is (and has been for a very long time) a general expectation of Scandinavian levels of social support but on US tax levels.

didds

and yet since 2005, there is no inheritance tax in Sweden (nor any gift tax), and since 2007, there is no wealth tax

There's the answer, scrap IHT but raise VAT to 25% and CGT and Dividend tax to 30% to match Swedish levels. Still means the kids get less.

Paul

scrumpyjack wrote:

didds wrote:

Yup. There is (and has been for a very long time) a general expectation of Scandinavian levels of social support but on US tax levels.

didds

and yet since 2005, there is no inheritance tax in Sweden (nor any gift tax), and since 2007, there is no wealth tax

The taxes and NI on earnings can be eye watering in Sweden with combined local and national taxes a60 or percent, also employer NI rates are high, the personaL allowance is low, you have tax on your private residence ( though you can rollover to next house and effective rate is 22% -I sold our house there two years ago). MOMS is usually higher than UK VAT. On the plus side there are deductions for some interest paid etc and the quality of life if you have work is higher (though heaven forbid as a incomer getting your foot in the door for a decent job without contacts)

Don't worry.
The scrapping of non-dom status and VAT on school fees will fund everything they promise.

Thats all just rather my point.

If you want Sandanvaian levels of social support, you need some sort of way to pay for it.

didds wrote:If you want Scandinavian levels of social support, you need some sort of way to pay for it.

I don't think that the average Brit wants to pay 60% plus in tax, just so that nobody is poor. We prefer more moderate taxes and accept some level of poverty, but not as far as the US goes, that has still lower taxes and little in the way of a safety net.

I like the fact that we have a choice like that. If every nation were the same then you could not relocate to a country that better suits your values.

I am feeling better about Starmer precisely because he is acting very restrained about taxes. But is he lying?

didds wrote:There is (and has been for a very long time) a general expectation of Scandinavian levels of social support but on US tax levels.

Meanwhile, our government aims squarely at achieving US levels of social support but on Scandinavian tax levels.

Lootman wrote:

didds wrote:If you want Scandinavian levels of social support, you need some sort of way to pay for it.

I don't think that the average Brit wants to pay 60% plus in tax, just so that nobody is poor. We prefer more moderate taxes and accept some level of poverty, but not as far as the US goes, that has still lower taxes and little in the way of a safety net.

I like the fact that we have a choice like that. If every nation were the same then you could not relocate to a country that better suits your values.

I am feeling better about Starmer precisely because he is acting very restrained about taxes. But is he lying?

Of course he is, they all do, goes with the job. Question is more, how big are the porkies.

absolutezero wrote:Don't worry.
The scrapping of non-dom status and VAT on school fees will fund everything they promise.

Both of those will probably have a net cost rather than raise more tax.

Some non Doms will leave, to our great financial detriment.

Some parents will move their kids to the state sector, increasing education costs.

Lootman wrote:

didds wrote:If you want Scandinavian levels of social support, you need some sort of way to pay for it.

I don't think that the average Brit wants to pay 60% plus in tax, just so that nobody is poor.

Thats again exactly the point . "Nobody" does. But at the same time they want FOR THEMSELVES and their family/friends/loved ones all of what society can offer including a billion coppers on the beat, catching crims from international drug cartels to 12 year olds nicking milk off doorsteps, an NHS that has a bed for every single patient on demand AND sufficient staff to deal with everybody on a moments notice AND NHS dentists in every street AND jails to house 75% of the population AND etc etc etc ...

If "we" want anything approaching that, then clearly the current taxation levels don't provide for it. If "we" want these taxation levels then "we" need to be honest about the expectations of what that can afford - which probably may mean stuff like (making examples up here, whatever) no cancer treatment for the over 70s, no cosmetic surgery for ANY reasons, 100% private dentistry, crime below £10K value not investigated etc etc etc. And that hionesty extending to politicians who dont promise the earth alongside tax cuts in the knowledge that they cant and wont deliver on the promises.

scrumpyjack wrote:

absolutezero wrote:Don't worry.
The scrapping of non-dom status and VAT on school fees will fund everything they promise.

Both of those will probably have a net cost rather than raise more tax.

Some non Doms will leave, to our great financial detriment.

Some parents will move their kids to the state sector, increasing education costs.

And that's before we even consider that the Labour mob have spent the so-called non-dom/school fees money about 20 times already.
Every time they pop up on the TV they claim 'taxing the non doms will pay for it'. Whatever bit of spending it is.
I might start keeping a log.

scrumpyjack wrote:

absolutezero wrote:Don't worry. The scrapping of non-dom status and VAT on school fees will fund everything they promise.

Both of those will probably have a net cost rather than raise more tax.

Some non Doms will leave, to our great financial detriment.

Some parents will move their kids to the state sector, increasing education costs.

The non-doms would not even need to completely leave. I imagine many of them have several homes in several locations. They can merely adjust the time spent in each home such that they are non-resident in the UK for tax purposes.

Less than 3 months in a year should make you non-resident in the UK. The US gives you up to 6 months. And so on.

DrFfybes wrote:

scrumpyjack wrote:
and yet since 2005, there is no inheritance tax in Sweden (nor any gift tax), and since 2007, there is no wealth tax

There's the answer, scrap IHT but raise VAT to 25% and CGT and Dividend tax to 30% to match Swedish levels. Still means the kids get less.

Paul

...and yet Sweden has (checks the billionaires per capita index) over 4 times the rate of billionaires than the UK?

servodude wrote:

DrFfybes wrote:There's the answer, scrap IHT but raise VAT to 25% and CGT and Dividend tax to 30% to match Swedish levels. Still means the kids get less.

and yet Sweden has (checks the billionaires per capita index) over 4 times the rate of billionaires than the UK?

Ikea?

I do not see many Americans or Brits relocating to Sweden to improve their chances of getting rich. And as I recall, you left there to find better opportunities elsewhere.

Combine Tax & NI?
So that folks who currently don't pay NI will wind up paying equal to 'workers'