Abolish tax on savings

scooter100_2

john_s wrote: »

Whenever I get into a discussion with someone who's saying "[insert taxation of your choice] should be cut / abolished," I always say what the earlier poster said (which other tax would you like increased instead?)

But I also add two other questions:

1. Or which expenditure would you like to see cut?

And the final clincher, which usually results in them mumbling something inaudible:

2. And would that tax increase or expenditure reduction affect you?

Taken from the last pre budget report http://www.direct.gov.uk/en/Nl1/Newsroom/DG_070832
total public spending will rise from £589 billion in 2007-08 to £678 billion in 2010-11.
id say they could quite comfortably cut 10s of billion off public expenditure and the vast majority of people would see no difference.this government wastes money on a monumental scale and will soon be calling in the IMF to bale us out (again).

Zebra

jackdoor wrote: »

Because savings generally come from income that has already been taxed once.

Yes, but the interest on those savings hasn't already been taxed. Income is still income however it comes in.

baby_boomer

The average person in the country can shelter ALL their savings in one year's ISA .

The clever person has been sheltering their savings in this way for years so that they have around £40K earning tax free interest and this amount is increasing by £3.6K pa and the tax free interest on £40K pa .

Does the really rich person need an additional tax free allowance?

MrMicawber_2

Taxing savings is the tip of the iceberg. It would be nice if we could save / invest more tax free but it pales into insignificance beside the pension time bomb which everyone, with a few notable exceptions like Ros Altman, seems to be hiding their heads in the sand over.

How on earth can anyone save / invest with confidence and certainty that they will have a definite pension of £x when they retire. The fortunate few are of course those on public sector pensions. As for final salary schemes - great if they survive but lots are going down the tubes while personal pensions offer no guarantee of the final fund amount.

With an ever aging popluation and only about 20% or so making reasonable provision for their old age there's a really serious economic problem coming.

Somehow something needs to be done about guaranteed returns to provide a guaranteed income increasing in line with RPI in retirement - not based on luck of the draw in annuity rates and not based on individual knowledge on where it's best to save or invest because most folk aren't, and never will be, interested until it's way too late.

Aegis

baby_boomer wrote: »

The average person in the country can shelter ALL their savings in one year's ISA .

The clever person has been sheltering their savings in this way for years so that they have around £40K earning tax free interest and this amount is increasing by £3.6K pa and the tax free interest on £40K pa .

Does the really rich person need an additional tax free allowance?

Certainly not when you consider that the tax money would need to be made up from somewhere. As it stands, the idea that your income from both interest and work is taxed at a single rate makes sense.

Zebra

jackdoor wrote: »

I bet you even gladly paid the Poll Tax with pride!

Eh? What's that got to do with it?
Bet you gladly watch other people paying tax on their hard earned wages/income while you enjoy the benefits of living in that society.
Just pay your taxes like everybody else has to and stop whinging about it.

john_s_2

scooter100 wrote: »

id say they could quite comfortably cut 10s of billion off public expenditure and the vast majority of people would see no difference...

I daresay. So which area(s) do you have in mind? (And would it affect you?)

StarRover

john_s wrote: »

But I also add two other questions:

1. Or which expenditure would you like to see cut?

And the final clincher, which usually results in them mumbling something inaudible:

2. And would that tax increase or expenditure reduction affect you?

1. For starters the costs of the Iraq and Afghanistan campaigns.

2. An audible and clear NO.

baby_boomer

Let's save money by having a European Foreign Policy and a European Army and a European Missile system.

And encourage the EU not to have much of a foreign policy.

That should easily cover tax free savings . As long as Russia doesn't play nasty on energy costs .

kingmonkey

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