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Nigel Farage Wants To Increase The Personal Tax Threshold To £20K
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I might support such a policy (I can’t believe I’m saying this).
But as usual with these pronouncements, such a policy does not appear to have been costed by Farage – so let me assist with a back of the envelope guestimate.
For each person earning at least £20k, they will pay ~£1,600 less in tax.
Assuming everyone working earns at least £20k (which is not far above the minimum wage), with a working population of circa 33 million, the total cost of such a policy would be around £50 billion in lost tax revenue.
With Farage having already cost the exchequer £40 billion due to Brexit – maybe he is just going for broke.
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"...with a working population of circa 33 million, the total cost of such a policy would be around £50 billion in lost tax revenue."
But it isn't quiteas simple as that.
The £50bn lost revenue will instead be diverted to people's pockets. They will spend most of it and much of that spend will attract VAT and Excise duties. Their additional spend will boost businesses who will make more profit and pay more business taxes. A large proportion of the "lost" revenue will simply be re-routed to the Exchequer by other means.
The £50bn lost revenue will instead be diverted to people's pockets. No, that was thatchers idea of Trickle Down - and we know it didnt work. ( coz she did the experiment and it er didnt work. )
I admire your Hymie desire to cost idle words. I wdnt trust The Nige and money ( er budgets not real his own loolah) Wasnt he the Tory wonder that said "£350m a week on the NHS" and then said the day after - oops he mispoke?
"Increasing the tax threshold to £20k would at least have the effect of putting money in the pockets of some of the poorest in society, rather than increasing the inheritance tax threshold.."
They are two different things.
One thing you have not included in your calculation is that the personal income tax allowance sees a reduction for those with an income of £100,000pa on a taper until it is reduced to zero for those earning £125,140. So they would not benefit at all from any increased personal allowance.
The only justification for inheritance tax is if it was imposed on the increased value of any property or other assets that were bequeathed (i.e. like a form of Capital Gains Tax). These gains should be offset by depreciation of any of the testator's assets. Any cash left in a will will have already been taxed and there is no reason why it should be taxed again simply because it changes hands on the owner's death.
There should be exemptions for people who inherit property in which they are living (for example if a child of the deceased is living with them at the time of their death). Taxing the increased value of the property might mean they have to sell the home they live in to pay the bill. This, of course, would immediately introduce a "loophole", where children might move in with parents if their death was imminent. So all in all, it would be best to simply abandon IHT entirely.
Of course all tax reductions benefit the richest people most, because they pay the most tax. The idea that only the poorest should see their tax bill reduced is simply socialist claptrap.
"ALL the candidates are promising things will never deliver never mind have the opportunity to deliver. Switch off until after the election...."
^^^This.
These campaigns are a ridiculous waste of time and money. One group of people are making promises that can never be fulfilled because they won't be in a position to meet them. Another group are making promises that are highly unlikely to be fulfilled because, although they will be in a position to meet them, they will announce that "circumstances have changed" by the time they get round to looking at their pledges and so they cannot be met.
If you enjoy watching senior politicians watering community gardens or falling off paddle boards, enjoy it. But don't for one minute (or even one second) consider they might do what they say they will. There is an election upcoming and they want your vote; if you're daft enough to cast it on the basis of what politicians tell you they will do, you will be - and deserve to be - sorely disappointed.
Poor old Hymie, what do you think people will do with the extra money they have? Yep Spend it on stuff that has duty and VAT etc. All it does is move from Direct to indirect taxation. Lefties hate that because they like to have your money up front to spend on their pet projects. Frankly income tax could easily be abolished completely.
Let's consider £100 of income before 20% tax that is completely spent by a product: £100 pre-tax income, £80 in your pocket, 20% VAT, means £66.67 is spent on an £80 product and £33.33 has been paid to the government in a combination of VAT and income tax.
Now let's consider £100 income with no income tax, £100 in your pocket, 20% VAT, means £83.33 is spent on a product and £16.67 has been paid to the government in VAT alone.
So the difference in this case is that the government gets half and the retailer (e.g. Amazon, who pays very little corporation tax) gets more in their pockets.
"^ If it's that simple , ToraToraTora, why are Jeremy Hunt and Sunak so keen on freezing allowances "
Politicians in the main are simple folk who only think of the immediate future (i.e. tomorrow, or possibly the day after). Next week is the "medium term"; next month is the "long term" and next year is beyond the foreseeable future.
So the only consequence they see of cuttting taxes is that it will provide them with less of other people's money to waste. They don't consider that leaving people with more of their own money to spend as they see fit will boost the economy, create growth and that most of the "lost" revenue will eventually be returned to them anyway. Far simpler to grab it from them immediately so that the government can waste it before they have the chance to do so themselves. After all, the government is far more proficient at spending money than Joe Bloggs is.
"So the difference in this case is that the government gets half and the retailer (e.g. Amazon, who pays very little corporation tax) gets more in their pockets."
On that basis, presumably it would be better if the government took all of our money and simply provided for (what they consider to be) our every need.
I admire the likes of Amazon. Every company and individual has a firm duty to reduce their tax bill to the absolute legal minimum. So long as whatever their accountants do is legal, all power to their elbow. When the government shows similar diligence when spending the huge sums of money with which taxpayers provide them, my view might change, but I doubt that's likely to happen.
I would agree with maintaining high taxation if (a) everything the government is supposed to provide is provided efficiently and of equal or better quality than taxpayers could obtain if they secured it themselves and (b) no government income was wasted.
Since neither of those is true or ever likely to be I'd prefer that I was tasked with spending my money on the things I need rather than the government. There are a few exceptions to that. Immediately springing to mind are defence, justice and policing. Though even the latter is becoming so hopelessly inadequate and unfit for purpose (not necessarily due to lack of funding) that many communities are now having to provide their own neighbourhood security services.
"...we saw with the Truss/ Kwarteng budget that the financial market can be concerned/can panic about unfunded tax cuts."
The financial institutions become concerned or panic at the slightest sign of instability. They thrive on fluctuations in the market.
"Unfunded" tax cuts are always castigated. What should receive far greater scrutiny is unfunded government expenditure.
> On that basis, presumably it would be better if the government took all of our money and simply provided for (what they consider to be) our every need.
No, just demonstrating that "All it does is move from Direct to indirect taxation" is nonsense. Getting rid of income tax loses Government income, and somebody like Farage ought to be explaining either how that income should be replaced, or what cuts should be made, but he has not done either. Another headline-grabbing idea with no substance.
"No, just demonstrating that "All it does is move from Direct to indirect taxation" is nonsense."
It's at worst misleading.
Allowing people to keep more of their own money and spend it themselves boosts the economy and boosts tax revenue in all manner of ways. Businesses that get busier will take on more staff (who will pay tax and NI); those staff will spend money (which invoves VAT and excise.
Money which is collected in taxes is dead money. It goes into a government pot, some of which will be spent on staff but much of it produces no additional wealth. The socialist view is that expanding the State expands the economy. It doesn't; all it does is sucks life out of the economy.
It is well known that increasing taxes often results in lost revenue. That's because the people who pay the most find ways of avoiding the increase, either by creative accounting or leaving these shores. The best thing any government can do is to leave people with as much of their money as they can. At the same time they should be creative and find ways of needing less money to run the few essential services that they need to become involved in.
Direct taxation is an abomination, beloved of the lefties it was introiduced at 10%, a temporary measure to fight Napoleon. In 1979 income tax was 33%. When TGL cut taxes the first few times, tax receipts increased. Direct tax is a left wing tool to make sure the poor remain so. It could easily be abolished at massive benefit to the nation and indeed, when they innevitably follow, the western world.
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