How bad will tax get?

*MF*

The Ernst & Young Item club forecasts that net borrowing will rise to £180bn in the forthcoming tax year and will exceed the chancellor's own prediction.

The Item club, which uses similar methodology as the Treasury forecasters, said that predictions by the chancellor, Alistair Darling, in last November's pre-budget report had been overtaken by events.

Total borrowing over the next five years would be £270bn higher than anticipated, it said.

Extracts from here:

http://news.bbc.co.uk/1/hi/business/7956395.stm


Just how bad will tax get to pay back this lot?

thriftybabe

It is looking pretty bad. I have heard that for higher tax payers they could go from 40% to 45 or even 50%. I also think they will raise NI tax, corporation tax and 22% income tax. I think they will do this after the next general election and god help us all. In addition VAT will probably go up!

*MF*

No return to boom and bust?

Never was so much owed by so many caused by so few!!
(Apologies to Churchill).

lynzpower

I shudder to think really what we with regards to tax environments.

Naturally we will see more claimants now, and no real new jobs being created on the horizon. Those of us who are left look on in horror at what could happen. I veer from shrugging my shoulders at it, to being scared to death.

the problem is that Labour wont really want to raise taxes, theyll leave that for the big bad tories to do.However there are a world of efficiency savings to be made- and the tories quite rightly will start there.

Depending which reports you believe, Boris Johnson ( make of him what you will) has found over 100m of efficiency savings going forward.

PFI has a lot to answer for- one majoir PFI player charged one local authority I work with over 750 quidd of your and my money to stop a dripping tap. You could get 2 weeks wages of a handyman for that - which was a 5 minute job if that.

Ballymackeonan

I remember the 1970s, where the starting rate of income tax was 33% in 1974, and rose to 35% for a couple of years. The top rate went up as far as 75%, with an "investment income surcharge" on top, and that could take the tax to 83%. Against that, the rate of VAT was mostly 8%, so the tax take was more on incomes than on spending, but "luxuries" were at 25% for a couple of years then as well. So that is how high tax rates have been in the past....

Pobby

Ballymackeonan wrote: »

I remember the 1970s, where the starting rate of income tax was 33% in 1974, and rose to 35% for a couple of years. The top rate went up as far as 75%, with an "investment income surcharge" on top, and that could take the tax to 83%. Against that, the rate of VAT was mostly 8%, so the tax take was more on incomes than on spending, but "luxuries" were at 25% for a couple of years then as well. So that is how high tax rates have been in the past....

Now add that to rising interest rates and it`s going to be a tough ride.

vivatifosi

For me there are three issues.

The first is that reduced tax receipts mean a bigger debt burden which at some point needs to be paid back. This has to mean either higher taxes in the future, or a tinkering around with the circumstances under which people can claim benefits - for example a raise in the pension age to 70.

The second is that reduced tax receipts means that inefficiency savings, as Lynz mentioned, need to be found now. It may also be the case that decisions need to be made as to what is valued within a service and what needs to be cut, beyond efficiency savings. For example - if healthcare receipts cannot be increased will certain services be rationed or taken out - eg IVF?

The third issue is that because the government has used its reserves in the good times, there is less scope to use the full armoury of economic options - there is not the money for stimulus that there may otherwise have been.

mbga9pgf

Ballymackeonan wrote: »

I remember the 1970s, where the starting rate of income tax was 33% in 1974, and rose to 35% for a couple of years. The top rate went up as far as 75%, with an "investment income surcharge" on top, and that could take the tax to 83%. Against that, the rate of VAT was mostly 8%, so the tax take was more on incomes than on spending, but "luxuries" were at 25% for a couple of years then as well. So that is how high tax rates have been in the past....

Thing is, world is far more global these days, just watch those on more than 50K flee this country like rats off a sinking ship..

To be honest, I dont blame them.

Singapore/Canada/New Zealand are looking pretty attractive right now.

trenchwars

Bend over :eek:

*MF*

Efficiency savings?

How many of us expect our MPs to set the example?

Perhaps not claiming for sons who are at university, not claiming for nannies as secretaries, or not claiming for main residences which aren't?

I so wish those that talk the talk would walk the walk!

amcluesent

The concept of 'tax' will be broadened to include a huge increase in administrative fines. Expect the bizzies to come down hard on motorists for easy £60s, everyone will be touched for £30 for some nonsense about with wheelie-bins etc. etc.