Taxes going up indirectly again? … #TaxNews #PensionRaid
Millions of tax payers will be paying more throughout the UK after March 2016 when the UK budget is set to raid pension contributions to raise some £34Billion for the treasury.
Scotland should pay more tax say the governing class in Scotland. The thought is backed by Scottish Labour and is being promoted by Kezia Dugdale who thinks its a risk worth taking. Scottish Liberals also support the notion in the form of Willie Rennie. At this time the tax has not been approved.
The U.K. Tax burden already sits at a fifth higher than the global average and looks set to rise further in the coming months. According to The Daily Mail George Osborne has pension savings tax relief in his sights for the March budget, with a target of £34 Billion to claw back. The Independent carry a similar story. These measures would largely affect higher rate tax payers, but there are many millions of these, and they won’t get the chance to negotiate a cozy rate of 2.5% mates rates with good old George. If you can then top up your pensions now ahead of March n review the situation once we know George’s real plan.
Which way are tax rates heading? Well, in the UK (in the tax year to 5 April 2014) we paid total taxes –to HMRC and local governments –of five hundred and eighty thousand million pounds. About 45% of this was as income tax and National Insurance, whilst just less than 20% was VAT. Less than 10% was corporation tax (this may not come as a surprise given all the news in recent years of large companies avoiding paying tax altogether). The remaining 20% + was collected from more than 20 other taxes including: fuel duties, business rates, council tax, CGT, IHT, SDLT, stamp duty on shares, tobacco duty, duty on wines and spirits, beer and cider, air passenger duty, insurance premium tax, landfill tax, betting taxes, vehicle excise duty, bank levy and environmental levies. Add in other sources of revenue and the UK Government received around £ 625 billion in 2013-14. That’s an incredible amount of money. Unfortunately, the Government’s total managed expenditure in the same year was about £ 720 billion. It’s fair to say that this is spent on vital public services (including education, health, pensions, public order, defence, transport, industry, agriculture and housing), but the question is whether it’s all spent wisely.
These are scary numbers but scarier still is the fact that we spent c. £ 50 billion just to pay the interest on our debt. And that’s more than we spent on either defence or public order! If you want more detail or for the latest government ‘tax and spend’ numbers, go to the Office for Budget Responsibility’s website http://www.budgetresponsibility.org.uk One thing to understand is that the current multibillion pound shortfall (between what we take in and what we spend) has to be borrowed. And that simply adds to the debt for future generations to repay. Now, governments with high debt need economic growth. Growth is a wonderful cure for debt because it both reduces government spending (on unemployment and other welfare benefits) and it delivers higher tax revenues (as businesses make more profits and people earn and spend more). But of course, to reduce our total public debt we have to do more than just slow down the rate at which we overspend! You’ll have heard the technical term for the overspend (the ‘deficit’) but many people (including some politicians) often confuse ‘reducing the deficit’ with ‘reducing the debt’ pile. These are two very different things –so let’s clear up this confusion.