The Lemon Fool

Targeted tax rises won't derail COVID recovery, UK chancellor told

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The Institute for Public Policy Research (IPPR) said in a report published on Friday that increases to corporation tax, capital gains tax, wealth tax, and land value tax would make a negligible impact on GDP growth

Disagree, and expect such taxation policies could very well see a large out-flight of capital and investments from the UK.

Hasn't wealth tax generally been considered nonviable in the past. Just adds yet more complexities to a already massively over-swelled tax rule book/reporting process for little actual (tax) benefit. Practices such as borrowing from in effect overseas self and/or gifting amounts to levels that reduce individuals to below thresholds. Could be a means to tax the likes of ISA/SIPP (£1M ISA value, 0.5% wealth tax, 5K/year tax liability), but awkward for home-rich/cash-poor grandma, £1M London suburb family home, 5K/year tax liability out of 9K/year state pension.

Land taxes are just another form of rates/council-tax increases that wont sit well with Tory voters.

Corporation tax increases would be adverse for businesses given Covid/Brexit, detrimental to GDP recovery.

1nvest wrote:Hasn't wealth tax generally been considered nonviable in the past. Just adds yet more complexities to a already massively over-swelled tax rule book/reporting process for little actual (tax) benefit. Practices such as borrowing from in effect overseas self and/or gifting amounts to levels that reduce individuals to below thresholds. Could be a means to tax the likes of ISA/SIPP (£1M ISA value, 0.5% wealth tax, 5K/year tax liability), but awkward for home-rich/cash-poor grandma, £1M London suburb family home, 5K/year tax liability out of 9K/year state pension.

Land taxes are just another form of rates/council-tax increases that wont sit well with Tory voters.

Corporation tax increases would be adverse for businesses given Covid/Brexit, detrimental to GDP recovery.

Yes it is easy for academics, who have never had a job in a real business generating real wealth, to dream of taxes that will magically solve every problem with no downsides. Meanwhile the real world carries on and hopefully ignores them. Land Value tax is one of their perennial favourites but ignores the lessons of the Poll Tax that any major change in the basis of taxation creates lots of winners and losers. The winners quietly enjoy their good fortune and the losers create a massive political stink.

I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

Speculation that the pensions lifetime allowance will be frozen.
But that penalises successful pensions investors, long-term pensions investors, and leads to senior people cutting their hours or retiring early.

CGT is a soft target - rates, bands, carry-forward - also dividend tax rates. There is a downside in making the UK less attractive to the wealthy, but most voters won't care about that.

The Tory manifesto has left the Chancellor with few options, even an obvious measure like a one-year suspension of the Triple Lock has its detractors.

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party.

Fortunately not quite that bad, but more centre left than I would like.

V8

Snorvey wrote:Tweaks to CGT and the LTA are all just peanuts. A new approach needs to be taken. Time to be bold Mr Sunak as the government was with the vaccine roll out.

Disagree. The time is not right. Even swelling the UK debt to 2Tn when real yields are mildly negative is more of a asset than a liability. Rising/spiking inflation, as sooner or later will occur, will further add to that (at least against fixed rate/term Gilts). The primary risk is that when each Gilt matures either that can be repaid or rolled and if expensive to roll at the time it would be better to repay rather than roll. But where that risk is spread over many years/decades.

If anything, swelling the 'debt' even further could be considered a appropriate choice at such historic low/negative real yield levels - provided its borrowed-to-invest (ideally in investments that are more inclined to be up as/when gilts mature and where rolling would be relatively expensive).

Fundamentally a good time for the UK to start a 1Tn sovereign wealth fund - at a time of Covid/Brexit having depressed the Pound/economy and when it 'pays to borrow'.

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

The mistake you are making is thinking this is the same political party as the one that had Thatcher and Cameron leading it.

This is New Labour with a blue rosette.
Blue Labour/Red Tories.
They are economically soft left, but socially soft right. In other words, what the British electorate wants.

absolutezero wrote:

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

The mistake you are making is thinking this is the same political party as the one that had Thatcher and Cameron leading it.

This is New Labour with a blue rosette.
Blue Labour/Red Tories.
They are economically soft left, but socially soft right. In other words, what the British electorate wants.

Sorry old chap, crypto-communists are communists no matter how they disguise themselves. These tax increases (closet or direct) are going to see sharp money flows out of the country in the trillions.

1nvest wrote:

Snorvey wrote:Tweaks to CGT and the LTA are all just peanuts. A new approach needs to be taken. Time to be bold Mr Sunak as the government was with the vaccine roll out.

Disagree. The time is not right. Even swelling the UK debt to 2Tn when real yields are mildly negative is more of a asset than a liability. Rising/spiking inflation, as sooner or later will occur, will further add to that (at least against fixed rate/term Gilts). The primary risk is that when each Gilt matures either that can be repaid or rolled and if expensive to roll at the time it would be better to repay rather than roll. But where that risk is spread over many years/decades.

If anything, swelling the 'debt' even further could be considered a appropriate choice at such historic low/negative real yield levels - provided its borrowed-to-invest (ideally in investments that are more inclined to be up as/when gilts mature and where rolling would be relatively expensive).

Fundamentally a good time for the UK to start a 1Tn sovereign wealth fund - at a time of Covid/Brexit having depressed the Pound/economy and when it 'pays to borrow'.

But much of the new 'Gilts' issued to pay for Covid were simply issued to the Bank of England. They did not even bother issuing them to the market and then buying them back. The BoE hands the interest back to the Treasury, so effectively there is no interest cost and no 3rd party who needs to be paid back or persuaded to roll them over for a new Gilt. There really is no urgency to do anything about this. It was a once in 100 year event so if anything needs to be done, it should be over a 100 year timescale. All that Rishi needs to consider is bringing the current annual budget a bit nearer to balance so the markets don't get too edgy. Everything is relative and our position is not as bad as many other countries.

scrumpyjack wrote:
The IPPR is just another of these self appointed Left Wing think tanks (if that is not a contradiction in terms), whose opinions are worth no more, and probably a lot less, than Kim Kardhasian's. The CEO is a writer for the Guardian.

The CEO is a writer for the Guardian

surely that make him a reputable source?

Arborbridge wrote:

scrumpyjack wrote:The CEO is a writer for the Guardian

surely that make him a reputable source?

Ha Ha, yes good joke! (It's a She, not a He)

absolutezero wrote:

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

The mistake you are making is thinking this is the same political party as the one that had Thatcher and Cameron leading it.

This is New Labour with a blue rosette.
Blue Labour/Red Tories.
They are economically soft left, but socially soft right. In other words, what the British electorate wants.

It's a very mixed government, and quite confusing to those of us used to the old divisions. In some ways, stealing New Labour ideas (to call them communist is incredibly wide of the mark, in my view) but at the same time still retaining some very right wing nasty party actions, and pandering to the right of the party.
It's Boris's attempt to be his one "one-nation" Tory which appeals to all sides - but let's hope he does not have "one-party dictatorship" in mind.

Arb.

scrumpyjack wrote:

Arborbridge wrote:

scrumpyjack wrote:The CEO is a writer for the Guardian

surely that make him a reputable source?

Ha Ha, yes good joke! (It's a She, not a He)

So the joke was getting the gender wrong

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

What tax increases? I thought the Budget is next week. In any case in what way are they acting like Communists? They are not even hard left or anything like it. You must have a very short memory.

Dod

Cyb3ria wrote:

absolutezero wrote:

Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

The mistake you are making is thinking this is the same political party as the one that had Thatcher and Cameron leading it.

This is New Labour with a blue rosette.
Blue Labour/Red Tories.
They are economically soft left, but socially soft right. In other words, what the British electorate wants.

Sorry old chap, crypto-communists are communists no matter how they disguise themselves. These tax increases (closet or direct) are going to see sharp money flows out of the country in the trillions.

If they happen.
It's newspaper tittle tattle at the moment and fails the horses' mouth test.

It's difficult to discuss the Budget without straying into SD territory, naught naughty, so let's get back to more important matters:

Rishi Sunak is under growing pressure to slash beer duty at the Budget as a group of Conservative MPs called for the levy to be cut dramatically to support the ailing pub sector. In a letter to the Chancellor co-signed by 68 Conservative MPs, Richard Holden, a Tory MP and member of the All-Party Parliamentary Beer Group, warned that the tax was “extraordinarily high” and risked stunting the recovery of the beer and pub industry as it emerges from the pandemic (Torygraf)

V8

88V8 wrote:It's difficult to discuss the Budget without straying into SD territory, naught naughty, so let's get back to more important matters:

Rishi Sunak is under growing pressure to slash beer duty at the Budget as a group of Conservative MPs called for the levy to be cut dramatically to support the ailing pub sector. In a letter to the Chancellor co-signed by 68 Conservative MPs, Richard Holden, a Tory MP and member of the All-Party Parliamentary Beer Group, warned that the tax was “extraordinarily high” and risked stunting the recovery of the beer and pub industry as it emerges from the pandemic (Torygraf)

V8

Why do we need to support the beer and pub industry (in particular)?

I'd expect some modest tax increases, but comments about communism above well overblown. Most people prepared to pay some more tax to cover covid / nhs but how much and where difficult to say. My guess is the low hanging fruit most likely such as higher rate pension tax relief, freezing personal allowance and higher rate tax allowance, cgt at income tax rates; but suprised if wealth tax too far for a conservative chancellor. I think we're all prepped for a bit of pain down the line cause of the billions blown in last 12 months.

The covid spending was mainly to protect the elderly, especially those over 75

The fair thing to do would be to apply national insurance to pension income

Do we expect any changes (either way) in the annual ISA allowance of £20,000?