Abolish tax on savings

Reaper

Much as I love the idea of not paying tax on my savings this is "head in the clouds stuff". Returning to Earth for a moment let's consider the realities.

The government has had to borrow enourmous sums to get through the credit crunch and now it proposes to borrow a lot more to get through the recession because (by Keynesian economics) the government has to spend more when consumers spend less. That means:
1) The government can't afford to chuck away a major source of tax revenues.
2) The government doesn't want you to save in a recession, it wants you to spend. That's one of the reasons interest rates come down, to make saving less attractive. Removing the tax on savings would be counter productive.

RayWolfe

StarRover wrote: »

Whenever tax cuts are suggested we hear this refrain. The alternative to raising other taxes is, of course, reducing existing government expenditure.

What on? Police? Hospitals. Drugs for people dying of cancer? Care for the elderly? Tax evasion? Local government support? Better protection for our forces? Drug rehabilitation? Pensions? Child support? ...? ...?
Don't tell me it should be on bureaucracy, all politicians make that cry until they see just how difficult it is to try to please all our clamoring voices. (See above.)

john_s_2

I'm certainly with StarRover on saving money by pulling out of Iraq. And I'm not convinced by the arguments for our involvement in Afghanistan. That said, I heard someone on the radio the other day (Today in Parliament I think, so could have been an MP) saying that the EU should send forces to the Congo, but not the UK as we're committed elsewhere. I'm sure the Government would soon find somewhere else to get involved in if we were to pull out of those campaigns (and I'd find it hard to disagree with stepping in to the Congo to try to bring some sort of order to the place).

But I have to disagree with MrExample's opposition to ID cards. I welcome them. I wouldn't favour a compulsory scheme (as in, having to carry it with you all the time) but as a means of ID and keeping a check of how many people are here, and whether or not they should be, I think they make sense. But I recognise I'm in a minority on that one.

But if there's taxes to be cut I think there are far more deserving causes than those of us who have savings with interest worth taxing. First in the queue should be those on low incomes (ie raise the personal allowance, and/or re-introduce the 10% rate). The regular tax rate could be increased so that higher earners (and I mean people like me, not very high earners) pay the same as before.

Cutting taxes on savings could be used if the Government wanted to encourage people to save, but I rather get the impression that this is exactly the opposite to what the Government wants right now.

Blah99

RayWolfe wrote: »

What on? Police? Hospitals. Drugs for people dying of cancer? Care for the elderly? Tax evasion? Local government support? Better protection for our forces? Drug rehabilitation? Pensions? Child support? ...? ...?
Don't tell me it should be on bureaucracy, all politicians make that cry until they see just how difficult it is to try to please all our clamoring voices. (See above.)

No, no, no. It's very easy to reduce bureaucratic expenditure. You simply cut out all the pointless, ridiculous non-jobs in the public sector. All of these jobs are paid for out of taxpayer's pockets, yet taxpayers have no voice or control over whether the jobs should even exist. And please don't say "elections", because the problem is the government's/public sector's obsession/utter fear of discrimination and political correctness, and Brussels-led forced policy adoption that most people with half a brain don't even want (non-curved bananas were illegal, remember).

So let's have a look at some public sector jobs paying over £50,000 that are being advertised this week in the Guardian:
http://jobs.guardian.co.uk/advancedsearch/?keyword=&industry=285&within=25&town=&location=&salaryfrom=50000&salaryto=1000000&employertype=either&Search.x=16&Search.y=9&Search=Search

Ooh look, "Head of Inclusion and Socio-economic policy". Nice £50k there. Or a "Programme Manager - Planning Advisory Service" for up to a cool £76k.

But hey, if you don't like management there are plenty of other non-opportunities, such as this "Assistant Director of Equality and Human Rights" for a nice £77,000.

http://jobs.guardian.co.uk/job/765198/assistant-director-equality-and-human-rights/

All over the country private sector companies are laying off workers, refusing pay rises and cutting benefits to survive. Meanwhile the public sector has grown bloated and overreached thanks to our tax pounds.

Most people only want councils to do simple things: empty bins, clean the streets, fix the roads etc. Unfortunately that's totally at odds with the public sector and government mentality.

Why do you think public sector jobs are jobs for life? Because once you're in one you become unfit to work in the real world (private sector), with real world (private sector) problems.

If anyone would like to argue this, please go ahead. However remember one thing. The public sector has no customers, outputs no products, makes no sales and takes no risks. It has a guaranteed income, incremented on demand, paid by taxation and enforced by law. Now show me a single private sector company that's in the same position.

ScarletBea

treecity wrote: »

Why don't high tax payers need any help? There was a time when people in high paying jobs just about went in to the high tax paying band, now though the percentage is very large. Someone who earns 250K per year can not and should not be grouped in with people who earn 45K, IMO

I completely agree with you, and it's not even 45k the minimum, I'm somehow below that and a high-rate taxpayer.
I still have lots of expenses, pay large amounts in tax and NI and now see my savings income reduced more and more.

And again, do you see footballers earning millions paying their 40%?

StarRover

john_s wrote: »

But if there's taxes to be cut I think there are far more deserving causes than those of us who have savings with interest worth taxing.

As it happens I'm in total agreement on this. It's the concept that the government budget is so finely balanced and our taxes are so wisely spent then for one tax to be cut another must be increased that gives me a (credulity) problem.

zaccy

But why do banks in the main pay less interest on ISAS than they do on taxed savings?

Plasticman

With current levels of borrowing, anybody who thinks that taxation will move in a direction that isn't 'up' is dreaming.

1echidna

Plasticman wrote: »

With current levels of borrowing, anybody who thinks that taxation will move in a direction that isn't 'up' is dreaming.

Well put, and the minority who are significant savers are regarded as in no need of tax breaks by the majority who are not - so no votes in it. In fact it is worse still for savers in that they are always fleeced in a crisis by measures to help protect businesses, mortgage payers and sometimes just people with debts. I am afraid I've just got used to the idea of, in all probability, a future where the real value of my savings and investments will decline.

Andy_L

Blah99 wrote: »

No, no, no. It's very easy to reduce bureaucratic expenditure.

but why should any savings made be used to make savings tax exempt rather than, say, reducing income tax across the board?