Could Basic Rate Tax Rise By 5p?

doire_2

http://www.telegraph.co.uk/finance/personalfinance/consumertips/7077807/Britain-is-out-of-recession-at-last---but-are-you.html



With Britain borrowing record amounts of money, many expect public spending cuts or tax rises – or both – as the Government attempts to balance the books.

Income tax could have to rise by as much as 5p in the pound, said Mark Dampier of Hargreaves Lansdown, the asset manager.
“We have been living through a phoney war, mainly because of the electoral cycle. No political party has the heart or the courage to tell it as it really is,” he said. “So we won’t get a real Budget until after the election and this will probably be worse than the infamous 1981 Geoffrey Howe Budget. So the real war will begin probably some time in July.
“What can we expect?

I strongly suspect that the big tax takers – basic-rate tax and VAT – will rise, VAT to 20pc and basic-rate tax by 2p to 5p in the pound.”
He added: “The high level of government and consumer debt makes me feel quite pessimistic.

It took over 300 years for us to have £380bn worth of public debt. It has taken this government 12 years to bring it to £850bn. Reducing it will mean a huge shock to our finances – the recession is not over for most of us.”

Harry_Powell

Time to put our money away in tax efficient vehicles like SIPPS, ISAs, VCT's, etc.

All available at Hargreaves Lansdown, the people who brought us "Pensions relief for higher rate tax payers will be abolished in the pre-budget speech, so fill your SIPPS now!".

HAMISH_MCTAVISH

VAT rising to 20% is a given.

But there is no way on gods green earth a government of any party will raise taxes by 5p on the pound across the board.

It's a nice scare story, until you realise that a 5p increase is already planned for very high earners, single income of 150K plus, so rehashing it as an attention grabber is a bit pointless.

For the rest of us, 1p or 2p is possible, (1p is already planned through NI) for a few years, but the tories are rightly quite anti-tax, so it'll come down again as soon as possible.

The best way out is through growing GDP, and both parties know it. Raising taxes is counterproductive, in anything other than the very short term. And raising taxes too far kills growth.

Tax rises will be minimal, most people won't see any material change to their standard of living.

Harry_Powell

HAMISH_MCTAVISH wrote: »

Tax rises will be minimal, most people won't see any material change to their standard of living.

So says McTavish with the calmness and assurance of someone who moves in the very highest circles of politics and business. I feel safe knowing that the ruling classes are so in control of the economy. With the likes of Brown, Cameron, Clegg and McTavish at the very pinnacle of this land's politics and decision making, we won't go too far wrong.

Alternatively, McTavish is talking out of his hat and, like the rest of us (including most MPS and MP candidates), has absolutely no idea what will happen; mainly because the levels of public debt we have now are unprecedented.

mitchaa

VAT rises probable, income tax rises 1-2p probable.

5p in the pound:rotfl:

It would put a lot of low earning workers £10-£15k into severe hardship/poverty

Old_Slaphead

HAMISH_MCTAVISH wrote: »

VAT rising to 20% is a given.


The best way out is through growing GDP, and both parties know it. Raising taxes is counterproductive, in anything other than the very short term. And raising taxes too far kills growth.

And the best way of growing GDP is by cutting some of the massive public sector bureacracy (consultants, quangos, Whitehall, Gov't nanny state advertising, welfare freebies etc etc - not front line staff) and investing some of the savings in the wealth creating parts of the economy

nollag2006

Agree with micthaa - 20% VAT is a strong likelihood, with a penny or tuppence on both the low rate and the 40% rate.

The other possibility is that the government will just allow us to inflate our way out of the problem, by keeping sterling artificially low. Negative real interest rates, and rapidly deflating mortgages could be a real vote winner, at least in the short term.

I know I'd vote for it

nollag2006

Old_Slaphead wrote: »

... investing some of the savings in the wealth creating parts of the economy

Like Financial Services?

:rotfl:

Graham_Devon

5p in the pound may happen. But it won't happen in one single year. Over 3-4 years, maybe. Would be too much of a shock otherwise.

chucky

Graham_Devon wrote: »

5p in the pound may happen. But it won't happen in one single year. Over 3-4 years, maybe. Would be too much of a shock otherwise.

are you ok Graham!?! this is all too much!!

that's a few days of sensible posts :T

Graham_Devon

chucky wrote: »

are you ok Graham!?! this is all too much!!

that's a few days of sensible posts :T

LOL. Maybe it's not me who's changed, rather you who's finally having a lightbulb moment

It's just thinking outside the box really. Many have just homed in on a single year and said "nah", without looking at how tax is actually applied.