Tories come up with good idea.....

WTF?_2

http://www.telegraph.co.uk/finance/personalfinance/savings/3999749/Tories-could-scrap-income-tax-on-interest-payments.html

Income tax could be abolished on savers' interest payments under plans being considered by the Conservatives.

George Osborne, the Shadow Chancellor, is considering the move as part of a Tory government's plans to help savers hit by interest rates falling to their lowest in more than 50 years.

Another option Mr Osborne's advisers are studying is to raise the income tax threshold for the over-65s, cutting the tax bill for all pensioners with savings and investments.

Ok, not much to be saved at the moment but a very good idea and rates will go up in the medium term. Why should the government get two bites of the cherry at your income and at your savings interest? It's bad enough that they are effectively stealing your capital by inflationary policies.

mitchaa

And hopefully reducing the benefits bill by a substantial amount should they win the next GE.

mewbie_2

Read article - 'option this' and 'possible that' sort of stuff.

In the photo - is he turning into Quentin Crisp?

olly300

!!!!!!? wrote: »

http://www.telegraph.co.uk/finance/personalfinance/savings/3999749/Tories-could-scrap-income-tax-on-interest-payments.html



Ok, not much to be saved at the moment but a very good idea and rates will go up in the medium term. Why should the government get two bites of the cherry at your income and at your savings interest? It's bad enough that they are effectively stealing your capital by inflationary policies.

Will only help the rich. The poor don't have savings.

They would do far better for everyone by raising the personal allowance level and then taxing people more above that level in a more progressive way.

Help help.........I'm being turned into a Lib Dem :rotfl::rotfl:

WTF?_2

olly300 wrote: »

Will only help the rich. The poor don't have savings.

They would do far better for everyone by raising the personal allowance level and then taxing people more above that level in a more progressive way.

Help help.........I'm being turned into a Lib Dem :rotfl::rotfl:

You don't need to be rich to have savings and the popularity of ISAs shows there is a mass demand for interest free saving.

There are plenty of savers on the MSE boards, are we all 'rich'?

Zagu

Savings should have their own rates of tax in my opinion. The tax has been paid to get the savings, so to tax at the same rate is unfair. On the other hand, people who have a lot of money could use it as a tax free income, which isn't fair either.

Something like half of the normal rate of income tax would do the job.

Sapphire

olly300 wrote: »

Will only help the rich. The poor don't have savings.

Nonsense. I have some savings and so do my siblings, yet we certainly don't consider ourselves 'rich'. Those savings – built up over years of hard work as security for ourselves – are actually in jeopardy because of other people's greed, etc (don't get me started on that one).

It's about time savers, including pensioners, were helped by a government, though anyone who has savings of, say, more than about £200,000 could perhaps pay more.

The Tories' suggestions would be welcomed by many people – at last someone is considering others apart from 'hard-working families'.

harry_w

!!!!!!? wrote: »

You don't need to be rich to have savings and the popularity of ISAs shows there is a mass demand for interest free saving.

There are plenty of savers on the MSE boards, are we all 'rich'?

I know what you meant, but it's not what you wrote.



Welcome to the warped world of ZIRP.

http://en.wikipedia.org/wiki/Zero_interest_rate_policy

Telegraph.co.uk
Federal Reserve is damned either way as it battles debt and deflation

We know what causes a recession to metastasize into a slump. Irving Fisher, the paramount US economist of the inter-war years, wrote the text in 1933: "Debt-Deflation Theory of Great Depressions".

By Ambrose Evans-Pritchard
Last Updated: 6:34PM GMT 18 Dec 2008

"Such a disaster is somewhat like the capsizing of a ship which, under ordinary conditions is always near stable equilibrium but which, after being tipped beyond a certain angle, has no longer this tendency to return to equilibrium, but a tendency to depart further from it," he said.

Today we call this "Gladwell's tipping point". Once it goes, you can't get back up. This is why the Federal Reserve has resorted to emergency measures that seem mad at first sight.

It has not only cut rates to near zero for the first time in US history, it is also conjuring $2 trillion of stimulus out of thin air. This is Quantitative Easing, or just plain 'QE' in our brave new world.

The key is the toxic mix of high debt and deflation. An economy can handle one at a time, but not both.

The reason why it "departs further" from equilibrium is more or less understood. The burden of debt increases as prices fall, creating self-feeding spiral. This is what Fisher called the "swelling dollar" effect. Real debt costs rose by 40pc from 1929 to early 1933 by his count. Debtors suffocated to death.

Brian Reading from Lombard Street Research has revived this neglected thesis and come up with some disturbing figures. US household debt is now $13.9 trillion, down just 1pc from its peak last year. Meanwhile household wealth has fallen 14pc as property crashes, a loss of $6.67 trillion. The debt-to-wealth ratio is rocketing.
Clearly the US is already in the grip of debt-deflation. "The obvious conclusion is that the Fed should print money to purchase private sector assets so as to drive up their price," he said.

...

Put bluntly, the Fed is deliberately stoking inflation. At some point it will succeed. Then the risk flips quickly to spiralling inflation as the elastic snaps back. There will be a second point of danger.

By late 2009, if not before, the bond vigilantes may start to fret about the liquidity lake. They will worry that the Fed may have to start feeding its holdings of debt back onto the market. The Fed's balance sheet has already risen from $800bn in September to $2.2 trillion this month. It will be $3 trillion by early next year.

"The bond markets could go into free fall," said Marc Ostwald from Monument Securities.

"The Fed went into this all guns blazing just as the Neo-cons went into Iraq thinking it was a great idea to get rid of Saddam, without planning an exit strategy. As soon as we get the first uptick in inflation, the markets are going to turn and say this is what we feared would happen all along. Then what?" he said.

... The bond markets seem to be betting that emergency action by central banks will take a very long time to work, if it works at all. By cutting to zero, the Fed has come close to shutting down the US 'repo' market that plays a crucial role in providing liquidity. It has caused havoc to the $3.5 trillion money markets - as the Bank of Japan, burned by experienced, had warned. It has become even harder for banks to raise money. Some argue that extreme monetary policy is already doing more harm than good.

Mr Bernanke is known for his "helicopter speech" in November 2002, when he nonchalantly talked of the Fed's "printing press" and said it was the easiest thing in the world to "reverse deflation."

Less known is his joint-paper in 2004 - "Monetary Policy Alternatives at the zero-bound". By then doubts were creeping in. He admitted to "considerable uncertainty" as to whether extreme tools will actually work. Liquidity could fail to gain traction.

abaxas

How about taxing gains? Ie > inflation?

Jennifer_Jane

Zero interest rates on savings will only help people who are receiving income more than the personal allowance rates, so not the poorest people anyway.

I can't see why both parties are so blind about increasing the personal allowances. To me it's the easiest, fairest, way. Olly300, agree with you.

Jen
x

cocktail

Sapphire wrote: »

Nonsense. I have some savings and so do my siblings, yet we certainly don't consider ourselves 'rich'. Those savings – built up over years of hard work as security for ourselves – are actually in jeopardy because of other people's greed, etc (don't get me started on that one).
True

It's about time savers, including pensioners, were helped by a government, though anyone who has savings of, say, more than about £200,000 could perhaps pay more.


why should they pay more? savings should not be taxed at all.