Kier Starmer stepping down

[MikeJ]

I object to the wealthy, who can afford to make contributions as high as they wish

No they can't. There's limits. You may not like those limits, which is ok, but don't say there's not limits.

 

[Newchodge]

No they can't. There's limits. You may not like those limits, which is ok, but don't say there's not limits.

I said they can make contribution as high as they wish, which is true. There are limits to the amount of annual contributions that receive tax relief. I cannot remember of that is £40,000 or £60,000. Either way, they do not NEED the tax relief to make whatever contribution they choose to make.

 

[DontAsk]

No they can't. There's limits. You may not like those limits, which is ok, but don't say there's not limits.

Hoist by your own petard.

 

[DontAsk]

For example you manage to save £30,000 in post tax pay into your proposed pension. You are drawing state pension. You then withdraw £30,000 from your pension. At 20% you will pay £6000 in tax. You end up with £24,000

No, most can take 25% tax free and pay tax on the remaining 75%.

I leave it to you to do the maths.

 

[MikeJ]

I said they can make contribution as high as they wish, which is true. There are limits to the amount of annual contributions that receive tax relief. I cannot remember of that is £40,000 or £60,000. Either way, they do not NEED the tax relief to make whatever contribution they choose to make.

This is what you said.

"However, I object to the wealthy, who can afford to make contributions as high as they wish, receiving tax relief @ 45%"

 

[Data Swami]

With Keir Starmer stepping down today, it's a good time to reflect on the decisions and changes made during his time in office.

Every government introduces policies that some people see as progress and others see as mistakes. Whether it's taxation, business regulation, energy policy, public spending, employment law, or immigration, opinions vary widely on what has worked and what hasn't.

Looking back, which decisions do you think have had the biggest impact on businesses and the UK economy? And if a new leader takes over, which policies would you keep, change, or reverse?

Interested to hear views from business owners, employers, employees, and investors alike.

From a business and general perspective I honestly cant see any changes no matter what party is in power right now. The treasury is indoctrinated into neoliberal ecoomics and the same with media and the other parties. Until they stop the whole equating economy for a household then it will be cycles of austerity, increased taxes and continued growth of inequality and higher and higher cost of necessary goods. For SMEs there will be very little as their continued measures will mean more limits on disposable income while the larger organisations will reap the rewards and extract that wealth

 

[pentel]

No, most can take 25% tax free and pay tax on the remaining 75%.

I leave it to you to do the maths.

That is the current situation.

@Newchodge is proposing full taxation at marginal rate on contributions and full taxation at marginal rate on withdrawals. That is the proposal I was responding to.

 

[Lucan Unlordly]

Then they are probably acting fraudulently.

Out of interest: Should you be eligible for PIP when your a single person living alone, earning £120k a year?

 

[Newchodge]

Not at all, we have discussed this extensively and they are following the letter of the law. Universal credit is based on net pay so paying into a pension by salary sacrifice reduces net pay.

Provided te salary sacrifice does not take their hourly pay below NMW. Which would be illegal.

 

[Newchodge]

Out of interest: Should you be eligible for PIP when your a single person living alone, earning £120k a year?

No idea, but i don't think PIP is means tested

 

[HFE Signs]

Given the extra difficulties put upon businesses (and the public), I'd really like to see VAT reduced to 15%, this would help everyone significantly.

 

[MikeJ]

Where do you think the £40 billion that's going to cost is going to come from?

 

[MikeJ]

Put VAT on children's clothes. Increase child benefit to make up for it.

Can anyone give me a good reason why a child's designer coat that costs £500 shouldn't have VAT on it?

 

[HFE Signs]

Where do you think the £40 billion that's going to cost is going to come from?

This is the problem, people look at it exactly like this - the reality is this would encourage growth and the net result would be more money generated in the longer term

 

[Newchodge]

Where do you think the £40 billion that's going to cost is going to come from?

From the increased economic activity that will result. It will have little effect on the spending patterns of the wealthy, but it will mean a majority of people will buy more as they have more available income. Leading to increased corporation tax, possibly increased employment so increased NI and PAYE income. However putting VAT on children's clothing will have a negative effect on spending.

 

[MikeJ]

It's 4% of the government's income. I welcome the idea that you both think the economy is going to bounce that much.

 

[MikeJ]

However putting VAT on children's clothing will have a negative effect on spending.

Do you think so? You'd be taking money off the better off, and putting it in the hands of the less well off. I think that will improve spending.

 

[Data Swami]

I think what many people dont understand about the economy is that it is not related to a household budget. Mind you newspapers and the governments since thatcher have indoctrinated this sort of neoliberal economics thinking. Government spending has the ability to increase activity in the economy. Especially with measures that target people further down the social demographic. One of the reasons we stayed in a recession for so long and have taken so much longer to recover is due to Austerity. So many services and resources cut from people that need it resulting in far less disposable income.

Add ontop of that with much of our necessary goods being privatised which has been hit by massive amounts of inflation again for those with less they have to spend it on that (and also those at the lower end of the wealth level end up paying far more for usage over others like those prepayment meters). It means they have even less disposable income. However when those people have more disposable income they are at the higher end of likeliness to spend that in the local economy so therefore helping local businesses and keeping things like the high street going.

All in all what should be happening is the change of our economic approach to focus on keynesian economics. Focus on local people and local businesses especially for government spending and contracts as those are the ones that are going to put it back into the economy and create jobs. However the bond markets will hate that.

Now productivity in the economy is another area for change and that i put solely on the consultancies like accenture, infosys, deloitte et al. With IR35 being fully embedded its resulted in so many people especially IT professionals coming out of the market for those consultancies to overcharge for subpar people and fully embed their staff within them. And as a result productivity in all those businesses where they are embedded has tanked. So it just goes to hoarding of resources and very little added economic activity

 

[Newchodge]

Do you think so? You'd be taking money off the better off, and putting it in the hands of the less well off. I think that will improve spending.

In order to have a zero impact on the lowest paid, you would have to increase child benefit by a significant amount. Which would also go to those who are better able to afford to cover the cost. I would have no objection to VAT on luxury children's clothing (your £500 coat, for example) but that would be quite difficult to do.

 

[Newchodge]

It's 4% of the government's income. I welcome the idea that you both think the economy is going to bounce that much.

The government, when looking at government investment in public services, never seems to take into account the multiplier effect. For example they are unhappy about young people with mental health issues, because they should be working. Invest in children's mental health services and there would be a huge multiplier effect, assisting the economy while also assisting people.

 

[Data Swami]

The government, when looking at government investment in public services, never seems to take into account the multiplier effect. For example they are unhappy about young people with mental health issues, because they should be working. Invest in children's mental health services and there would be a huge multiplier effect, assisting the economy while also assisting people.

Ye I blame this on the treasury. The way they are setup is to have an economist and non economist work together. However the non economists now only understand Economics by the lense of neo liberal economics from thatcher etc. So every single policy since then has always ignored the consumption side of the economy and those multiplier effects. Its always a ins must equals outs and privatise everything

 

[MikeJ]

The government, when looking at government investment in public services, never seems to take into account the multiplier effect. For example they are unhappy about young people with mental health issues, because they should be working. Invest in children's mental health services and there would be a huge multiplier effect, assisting the economy while also assisting people.

Yes they do. It's a well known effect. It's difficult to measure, but they're well aware of the impact.

 

[MikeJ]

In order to have a zero impact on the lowest paid, you would have to increase child benefit by a significant amount. Which would also go to those who are better able to afford to cover the cost. I would have no objection to VAT on luxury children's clothing (your £500 coat, for example) but that would be quite difficult to do.

But anyone on more than £80k doesn't get child benefit. So you're really pushing money out of the well off and into the hands of the less well off. I'm surprised you're against the idea.

 

[Newchodge]

But anyone on more than £80k doesn't get child benefit. So you're really pushing money out of the well off and into the hands of the less well off. I'm surprised you're against the idea.

VAT is a very regressive tax. I don't want it to be extended in any way.

 

[Data Swami]

VAT is a very regressive tax. I don't want it to be extended in any way.

Id bin it off completely. It screws up things for Small businesses who end up within the limit to charge VAT and then have to go through the panic of what they do with their pricing now theyve reached the limit.

It also artificially raises the prices of many necessities. I believe tampons etc are Vatable. I see it as a mechanism to make trade, business etc have a bit of friction. Now would that reduce the actual prices of goods in supermarkets? Probably not as we very rarely see those changes in prices but for business it would make it easier for businesses to do business with each other and also abroad as there isnt any confusion as to whether certain bits of business is vatable or not and end up with the business being charged more. Plus that annoying costco pricing will disappear.

Other than a source of government tax income I cant see what specifically it delivers to people and businesses

 

[MikeJ]

Strange that most countries have VAT though, given it's so terrible.

 

[Data Swami]

Strange that most countries have VAT though, given it's so terrible.

its not strange at all. Its an easy route for them to tax business and people outside of income tax and corporation tax. Its like any other sales tax its just been applied across the board rather than how the americans apply sales tax.

Doesnt make it a "good" tax and the way zero rated items are selected means at any point a necessity can be added to that vatable list like tampons, pads etc have been. Even sometimes been talk of adding it to nappies. And those changes impact those with alot less money in their pocket

 

[DontAsk]

Id bin it off completely. It screws up things for Small businesses who end up within the limit to charge VAT and

So level the playing field and make all business VAT registered. And, no, it would not add 20% to prices. Those small businesses would now be able to reclaim VAT on their supplies.

then have to go through the panic of what they do with their pricing now theyve reached the limit.

Fail to plan and plan to fail.

 

[Data Swami]

So level the playing field and make all business VAT registered. And, no, it would not add 20% to prices. Those small businesses would now be able to reclaim VAT on their supplies.


Fail to plan and plan to fail.

Plenty of businesses dont have a huge level of supplies especially small service businesses so what fundamentally does it add for businesses other than a way to extract a friction tax? That isnt leveling the playing field its just adding more friction to running a business. More often than not prices do get increased by 20% as why would anyone want to take a hit for their time. And the flat rate scheme is just as screwed too.

If you want to level the playing field then reduce the friction to run and have a business. Remove barriers to entry from certain high barrier markets.

And that excludes everything else around VAT

 

[DWS]

So level the playing field and make all business VAT registered. And, no, it would not add 20% to prices. Those small businesses would now be able to reclaim VAT on their supplies.

So who ends up worse off? It will not be businesses as they all will be VAT registered so the people worse off will be the end consumer, that being home owners and everyday people.
So the people who actually need the help will have to pay more using your idea.
I can’t believe that you could be so naive as to think small businesses will not just add the additional VAT rate onto their prices, as mentioned above a lot of small businesses do not have much input VAT to reclaim, plus they will also have the additional compliance costs of being VAT registered!
So with your thinking, a gardener with annual turnover of about 20k should be VAT registered? At the moment they may charge £30 to cut someone’s lawn but this will now cost £36 but you want them to sit down and work out their VAT on expenses which may be a bit of fuel and allocate this to the job?
Crazy!

 

[Mark T Jones]

Everything has to be paid for.

If you do away with VAT, it will need to be replaced with another tax.

Mostly, the consumer ends up paying - whether its corporation tax, NI, PAYE, duty, its a cost which has to be passed on.

 

[Data Swami]

Everything has to be paid for.

If you do away with VAT, it will need to be replaced with another tax.

Mostly, the consumer ends up paying - whether its corporation tax, NI, PAYE, duty, its a cost which has to be passed on.

Not specifically since an Economy is not a household budget. Government spending is able to promote economic activity and if the tax burden is lowered for those that spend most of their income in the economy then the consumption side of the economy grows and can counter the impact of a tax.

If we reference the recession when spending was cut it resulted in less consumption in the market as it took money out of the hands of everyday people and as such we ended up being in a recession for far longer than we should have. Which also impacted tax income too but tax burden on everyone increased.

 

[DWS]

Everything has to be paid for.

If you do away with VAT, it will need to be replaced with another tax.

Mostly, the consumer ends up paying - whether its corporation tax, NI, PAYE, duty, its a cost which has to be passed on.

But if as suggested above if every business has to be VAT registered then the only people to suffer will be Joe Public as the end consumer.

 

[Mark T Jones]

Not specifically since an Economy is not a household budget. Government spending is able to promote economic activity and if the tax burden is lowered for those that spend most of their income in the economy then the consumption side of the economy grows and can counter the impact of a tax.

If we reference the recession when spending was cut it resulted in less consumption in the market as it took money out of the hands of everyday people and as such we ended up being in a recession for far longer than we should have. Which also impacted tax income too but tax burden on everyone increased.

Trickle down theory is flawed (is is every economic theory when applied rigidly) - it was Truss's downfall.

There is always an argument for tax breaks, but simply abolishing VAT would leave a sizeable hole which needs to be filled.

 

[Data Swami]

Trickle down theory is flawed (is is every economic theory when applied rigidly) - it was Truss's downfall.

There is always an argument for tax breaks, but simply abolishing VAT would leave a sizeable hole which needs to be filled.

Im not quoting trickle down theory here. Trickle down is the implication that more profits to bigger business trickles down. VAT impacts everyone so cutting it directly impacts consumers.

And as i stated before an economy is not like a household. A tax like VAT which adds friction to economic activity for everyone so its reduction or removal makes it easier to spend in the economy especially making those with little have their money go alot further spending on not just necessities but in the local economy.

Economic theory that is perpetuated at the moment is neoliberal economics which has parrotted this whole like a household rubbish which is what drove austerity and cut spending which reduced consumption and economic activity and so for their theory of balancing the books theyve increased taxes on everyday people.

Much of their attempt to entice investment is where your statement on trickle down applies as that is practically every neoliberal economic policy to ignore consumption in the economy and focus on investment but none of that trickles down as its hoarded by a tiny few.

 

[Mark T Jones]

Im not quoting trickle down theory here. Trickle down is the implication that more profits to bigger business trickles down. VAT impacts everyone so cutting it directly impacts consumers.

And as i stated before an economy is not like a household. A tax like VAT which adds friction to economic activity for everyone so its reduction or removal makes it easier to spend in the economy especially making those with little have their money go alot further spending on not just necessities but in the local economy.

Economic theory that is perpetuated at the moment is neoliberal economics which has parrotted this whole like a household rubbish which is what drove austerity and cut spending which reduced consumption and economic activity and so for their theory of balancing the books theyve increased taxes on everyday people.

Much of their attempt to entice investment is where your statement on trickle down applies as that is practically every neoliberal economic policy to ignore consumption in the economy and focus on investment but none of that trickles down as its hoarded by a tiny few.

Life is too short to argue with AI

Trickle down is essentially about cutting taxes to encourage spending and growth. It might be targeted, like the recent cut in VAT for hospitality (which seems to have had little effect on spend), or general such as cuts in PAYE or corporation tax - used to good effect (for a while) by Thatcher & Raegan - both ended badly

Arguably the opposite is the traditional labour stance of tax & spend - kind of tax-funded QE

I've no idea about neo-liberal policies.

 

[Data Swami]

Life is too short to argue with AI

Trickle down is essentially about cutting taxes to encourage spending and growth. It might be targeted, like the recent cut in VAT for hospitality (which seems to have had little effect on spend), or general such as cuts in PAYE or corporation tax - used to good effect (for a while) by Thatcher & Raegan - both ended badly

Arguably the opposite is the traditional labour stance of tax & spend - kind of tax-funded QE

I've no idea about neo-liberal policies.

Argue with AI? What are you going on about...

Trickle down has nothing to do with cutting taxes. Trickle down economics is the theory that giving breaks and helping large firms be more profitable means that trickles down to staff etc. And the theory that billionaires create a trickle down for everyone else.

Thatcher and Reagan are the starters of Neoliberal economics which drove privatisation and the thought of the economy being like a household so now the treasury is indoctrinated into only that way of running the economy. And they advocated for trickle down economics which is why they pushed for privatisation and breaks for corporations.

The reason cutting vat on only hospitality didn't improve that market is due to all other issues with costs for regular people there is practically no disposable income which stems from a whole heap of other issues with Neoliberal economics.

Now would removing vat be a golden bullet? Absolutely not until we start actively removing Neoliberal economic policy it will still be the same fight for balancing the books which as an economy does not work as it causes stagnation and increased inequality. As we have seen since the financial crash. But it would be a stimulus and more attuned to Keynesian economics which can be them teamed with more bottom up approaches

 

[Scalloway]

Speaking as someone who used to do the books for a hospitality business the advantage is for the businesses. If you are selling food a huge part of your turnover is paid to HMRC as there is no VAT on wages and food is zero rated. Reducing the VAT rate increases profitability.

 

[DontAsk]

So level the playing field by removing VAT altogether, but I still don't see anyone offering a viable alternative to replace the VAT income for HMRC.

 

[MikeJ]

Speaking as someone who used to do the books for a hospitality business the advantage is for the businesses. If you are selling food a huge part of your turnover is paid to HMRC as there is no VAT on wages and food is zero rated. Reducing the VAT rate increases profitability.

Dan Niedle did a post recently about this. Smaller retailers don't really benefit. Most of the gain goes to McDonalds.