MSE News: Report raises option of 7p income tax hike

edited 21 October 2009 at 11:43AM in Cutting Tax
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edited 21 October 2009 at 11:43AM in Cutting Tax
This is the discussion thread for the following MSE News Story:

"The Government may have to add 7p to the basic rate of income tax as part of efforts to cut the national debt, according to a report published today ..."


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  • LokoloLokolo Forumite
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    Am I right in thinking its 7p/£1? Otherwise I am uber confused!

    But if it is, thats HUGE! I hate UK.
  • Gordon_the_MoronGordon_the_Moron Forumite
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    Yes 7p per £1

    First Gordon Brown abolishes the 10p tax bracket, hitting the lowest paid hardest, what a socialist he will be if he now also increases the basic rate of income tax by 35%.... what a legend I'd be running out to vote for him come election day whoop whoop
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  • ScarletBeaScarletBea Forumite
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    Why can't people talk in percentage points, all this p in the £ is so confusing...
    Increase from 20% to 27%, which is awful!

    Why don't they just increase the VAT to 20%? It's a few pence/small pounds in each product and it would be much better than increasing income tax, still getting lots of money in the government's coffers.
    After all, did anybody suddenly start buying more when VAT went from 17.5 to 15%? Silly...

    Another option would be to go after tax of the big earners, the ones with lots of tax tricks to avoid income tax, but don't get me started on that......
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  • 00ec2500ec25
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    ScarletBea wrote: »
    Why don't they just increase the VAT to 20%? .

    according to the report on the radio this morning the 7% increase will not be enough anyway, and the VAT increase is already factored into the equation which arrived at the need to increase IT by 7%

    so even after VAT and 7% IT increase they will still need to cut expenditure anyway

    but then again its only one of many doom laden economic forecasts and we know how reliable they are (and how objectively reported by our beloved media outlets)
  • mamburymambury Forumite
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    another 7p???!!! Thats going to help the economic recovery then! Less in peoples pockets so less being spent on the high street......DUH!

    I realise that this debt has to be paid off, surely a more sensible option would be to cut public spending where it's not needed ie Trident, etc and use the tax increases as a last resort.

    DO these people in govmnt. have any idea what it is like to live in the real world??? I do wonder if part of the job description is to leave you common sense at the door when you join the commons!
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  • LokoloLokolo Forumite
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    I reckon they should up a big company tax for profits. If profits are ovet X they get taxed Y. Especially in terms of banks, as lot of debt the UK are in are because of them.
  • wizk1wizk1 Forumite
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    Lokolo wrote: »
    I reckon they should up a big company tax for profits. If profits are ovet X they get taxed Y. Especially in terms of banks, as lot of debt the UK are in are because of them.
    Then these large companies will simply pull out of the UK leaving the economy in complete ruins (worse than now).
  • dazza.mkdazza.mk Forumite
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    ScarletBea wrote: »
    Another option would be to go after tax of the big earners, the ones with lots of tax tricks to avoid income tax, but don't get me started on that......

    Labour tried that in the seventies and raised next to nothing as all the high earners then moved on, everybody will have to take the pain through any tax rises, or otherwise other countries will cream off the top earners / companies.

    http://www.accountancyage.com/accountancyage/news/2250904/swiss-tax-woo-ftse-100#
  • smk77smk77 Forumite
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    Yes 7p per £1

    First Gordon Brown abolishes the 10p tax bracket, hitting the lowest paid hardest, what a socialist he will be if he now also increases the basic rate of income tax by 35%.... what a legend I'd be running out to vote for him come election day whoop whoop

    Didn't he raise the personal allowance to compensate (with a bit of pressure of course)?

    Isn't this the opinion of National Institute for Economic and Social Research? Nothing to do with Gordon Brown's opinions or that of the next Prime Minister.

    This figure is merely quoting what income tax may have to go up to but doesn't take into account any other options that the Government may have...For example, HBOS profits alone in 2007 were £5bn. We generate just under £200bn from income tax each year. HBOS will make £5bn again and therefore the Goverment will surely be able to take this profit (because we own it) and this would contribute 2.5p of the 7p increase. Add in the other banks and perhaps that 7p is covered? The government may sell the banks for a decent profit too.

    I accept that the above may be flawed but they point I'm making is that there are options and you are taking this "possible" rise too literally. It'll never happen.
  • PennywisePennywise Forumite
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    The debt is so huge and still growing at an alarming rate that tinkering about with small tax rises or small public spending cuts just won't make an impact. If you look at the figures, VAT could well increase to 20% or even higher AS WELL as a few percentage points on income tax AND 10/20% cut in public spending and even with all that we'd only be reducing the huge debt over many years. I really don't think that people understand just how bad things are.

    As for taxing the rich, even if you taxed them at 100% of their earnings, it's still a drop in the ocean and won't cover the shortfalls without increases in VAT and income tax. (Not to mention them moving abroad so we'd get zero anyway!).

    The reality is that ALL taxes will rise by a few percentage points AND public spending will be cut by at least 10%. Everyone is going to be hurt by this for many years to come.
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