I was actually quite encouraged by Starmer's speech, not because it was 'feel-good', but because it wasn't. The last 14 years of Tory rule has caused untold damage to the country, which will undoubtedly take time to put right, and it may well be painful in the short term. It felt like the grown-ups were back in the room, though. The first big test for Labour will obviously come with October's budget and I'll reserve my initial judgment until after that. We'll see at that point how valid the 'they're all the same' claim is. They won't go back on the pledge not to increase income tax, NI, or VAT, but of course there must be other tax rises - I don't think many who voted for Labour would have expected otherwise - what will be telling is where the emphasis of the tax burden falls. A Labour government should ensure that the increases apply to those most able to afford them and I'm hoping to see changes to capital gains tax, inheritance tax, and relief on pension contributions that will do just that. I'd also like to see a one-off wealth tax, but don't think that's likely. We'll see.
Hi Stroller, could I ask what exactly do you mean or what do you think Starmer & Reeves mean by: “They won't go back on the pledge not to increase income tax, NI, or VAT”?
I would have thought that that was self-explanatory - they won't increase the rates of any of these taxes. I suppose they could increase tax revenues by playing around with income tax or NI thresholds, or extending the scope of VAT, but I don't expect them to do that either. Your question suggests that you suspect otherwise - do you?
By not changing the income tax thresholds (upwards) they are imposing a de facto tax rise on everyone who pays income tax, but a proportionately heavier one on lower earners. Just what the Tories did for years of course. They claim there is a £22bn ‘black hole’ in the budget that they hadn’t accounted for. All their spending promises were to have been paid for by taxing non-doms, not changing the thresholds (which I think was factored in to their spending plans) etc etc. Inheritance tax provides about £6bn in in government income a year, so they would have to double that to get half way to filling the ‘hole’. Capital gains tax is estimated to provide about £15bn in government revenue this tax year, but the take has been going down over recent years, so it would have to go up by a significant amount as well. Tax relief on pension contributions is incredibly regressive, the poorer you are the less you benefit from being prudent. It’s also quite complicated to explain and to calculate expected government revenue from this source. Have they already made pledges on corporation tax? I think spending cuts, including to welfare benefits, are going to play a big role, but suspect possibly all of the taxes you mention will be fiddled with as well. The only question should be, what do we get in return?
Yes, tax relief on pension contributions is incredibly regressive, which is why it should be reformed, potentially raising £10bn.... Fabian-Society-expensive-and-unequal-Aug-24-for-pdf-fixed.pdf (fabians.org.uk) Taxing capital gains at the same rates as income could raise £8bn.... How to raise £8bn by increasing capital gains tax - Tax Policy Associates A further £4.7bn could be raised by reforming inheritance tax reliefs and exemptions.... Reforming inheritance tax | Institute for Fiscal Studies (ifs.org.uk) That's the £22bn right there, then you stick a wealth tax on top.....
He’s not said that though has he? He’s just said things are going to get worse. I got the impression that higher taxes will be used to balance the books, not for increased spending on public services. Here is their pre discovery of the black hole ‘fiscal plan’ saying what they will spend on and where they will get the money from https://labour.org.uk/change/labours-fiscal-plan/ Presumably some or all of this will have to be sacrificed if filling the ‘black hole’ takes priority. Anyway, we’ll see. I’m actually more interested in how he intends to fill what he called the ‘societal black hole’ that he also blames on the Tories. The only thing he has quoted in reference to this is the Farage Riots.
None of the tax changes I've set out were in the fiscal plan, so if they were used to plug the black hole none of the spending in the plan should have to be sacrificed. We'll see in October. I'm not sure what he means by the 'societal black hole', but Farage is definitely to blame for it.
It could just be my innate distrust of politicians or the fact that over the years I’ve had to read literally hundreds of Commercial Agreements, including SPAs, where it is essential to read and understand what is actually stated, and often more importantly what is not explicitly stated. Just think back to Starmer’s definition of working people ‘people who earn their living’ - as soon as I heard that I said to my wife that that doesn’t cover Pensioners, as they (primarily) no longer earn: Rachel Reeves’ announcement re the removal of the Winter Fuel Allowance seems to have confirmed that interpretation. I’ve also heard that they are considering extending the scope of NI to working Pensioners. As you know, once you hit Retirement Age you no longer have to pay Employees NI. Hopefully, the outcry over the Winter Fuel Allowance will make Starmer and Reeves think twice.
As I said, they've said they won't increase the rates of these taxes, it doesn't mean they won't reduce thresholds or extend their scope. I hadn't thought of NI on earnings after retirement age. Maybe they will bring that in. It'd cost me a few quid, but I wouldn't begrudge it.
Yeah go for it, wouldn’t cost me anything as I don’t work at all which I thought was the definition of retired/pensioner. And I’m still too young to get the state pension, so I think that it’s right that other old people should fund my public services. It makes sense for Labour to target the elderly as that demographic is the least likely to vote for them. My mum (85 next week) actually did vote for them, but now hates Reeves with a passion because of the winter fuel allowance thing. It’s not that she can’t afford losing this benefit it’s that it was hidden despite clearly being planned pre election. So far the losers under Labour are pensioners and children in families which have more than 2 kids, while the winners are train drivers and prisoners. Neat.
But we do fund your Public Services - income tax is deducted from my Company Pension, my State Pension as well as my NED/Chair Fee.
But NI deductions are (were?) supposed/designed to fund your State Pension once you reach Retirement Age (which was supposed to be 65 but they unilaterally decided to increase that to 66 so I have lost a year’s pension). As such, I’ve already paid for what I’m receiving
They're not removing the WFA, they're means-testing it. There's a big difference. Pensioners have had the best breaks in life compared to the youth nowadays. In my life i've been hit by tuition fees, the 2008 crash, covid, 14 years of Tories, a crazy house market with more fun to come. Removing a small amount of money from the richest pensioners doesn't seem to be that bad in my opinion.
As a pensioner I have to agree with this I am very lucky...and been able to donate both my and my hubbies wfa to a more deserving cause....a charity in our area But that could have included my daughter who earns a wage but is still struggling to pay heating costs. The less well off pensioners will still get wfa..I won't. I am pleased about it
