270,000 Civil Service Workers To Strike For 2 Days

Sir_Humphrey

michaels wrote: »

...but I do not see how the govt can continue to deficit finance 25% of spending without rates rising to the extent at which private investment is crowded out (and even potentially triggering an Icelandic style funding crisis).

But low IRs will not allow recovery in a liquidity trap. Deflation would also increase real interest rates which would be the risk of cutting back (IRs are already virtually at the zero bound).

One way around could be to force consumption by old fashioned tax and spend (thus increasing money velocity). Tax cuts would likely be saved (and thus not improve money velocity). But that would be rather controversial poltically!

malcindebt

Further strike is scheduled for Friday 19th March.

Kohoutek

What do these unions want the government to do? Double income tax so the public sector can keep all its cushy jobs and its ridiculously redundancy structure? That's what every union is demanding - raise taxes, don't make any concessions or cuts.

They're just another selfish group that wants to guzzle on taxpayer's money.

Pennywise

There are some very simple ways of not having to change the T&Cs of the public sector workers yet achieve a much better result for the vast majority of the taxpayers as a whole.

Firstly, scrap the tax-free status of all redundancy lump sums above the legal minimum. That way, it's fair to everyone. Those who aren't eligible for unusually large pay-offs, i.e. the vast majority of workers in the small business private sector will still get their paltry pay-offs tax free, but EVERYONE getting payoffs over and above statutory minimum will have to pay tax at their marginal rate. The higher the earner and the bigger the lump sum will mean that some or all of the lump sum would be taxed at higher rate of 40-50%. That's fair to everyone, surely? It's a shame that it may hit the public sector workers hardest as they're the ones most likely to get a big payoff, but at the end of the day, as long as the rules apply to all workers, public and private, it's fair! Another plus point is that those few in the private sector lucky enough to get huge payouts will also pay more tax - again, that's fair.

Secondly, increase tax rates for occupational pensions - again, same rates etc for all, so it is fair to all those workers who get occupational pensions, but have a "pension personal allowance" so those people with very low, below average, occupational pensions don't have to pay any tax at all, those with "average" occupational pensions pay at basic rate tax, but those with "higher than average" occupational pensions pay at higher rate - obviously allowance thresholds and tax rates need to be tapered. The higher rate threshold for pensions would be a lot lower than the normal higher rate threshold. I'd see it being something like no tax on the first £2,500 p.a., then 20% on the next £7,500, then 40% on anything over £10,000 p.a. This wouldn't hit those with the smallest pensions at all, yet would be a fairer tax on those with higher than average pensions. Again, completely fair as it applies to public and private sector workers, but would probably hit the public sector workers hardest as they're the ones most likely to have higher pensions and of course, will hit even harder those few in the private sector with over-generous pensions.

By changing tax rules along these lines, the workers can't possibly complain about their T&Cs being changed, as they simply aren't. Yet, we'd have a lot more tax revenue. As there is no doubt taxes have to rise, surely it is fair that in all areas of taxation, it is those with incomes above average that have to bear an above average level of tax increases - we need to change the structure so that those at the bottom of the earnings heap don't suffer too much, but those on average and above average incomes take more of a hit.

Sir_Humphrey

I'd be in favour of removing tax breaks for those on high incomes. Some of them are outrageous.

This is not an issue of bleeding the country dry. The pension is part of our contract of employment. If the government were to default on that, then why not just default on our gilt bonds too? The consequences would be equally bad for the UK.

Some people think that public servants are wonderful when they put out fires or do life saving, but then take a difference attitude when they have to open their wallets. I haven't decided whether that attitude is just cheapskate or plain freeloading.

lemonjelly

Sir_Humphrey wrote: »

I'd be in favour of removing tax breaks for those on high incomes. Some of them are outrageous.

This is not an issue of bleeding the country dry. The pension is part of our contract of employment. If the government were to default on that, then why not just default on our gilt bonds too? The consequences would be equally bad for the UK.

Some people think that public servants are wonderful when they put out fires or do life saving, but then take a difference attitude when they have to open their wallets. I haven't decided whether that attitude is just cheapskate or plain freeloading.

It is the age old theory of people voting with their wallets imo.

StevieJ

Pennywise wrote: »

By changing tax rules along these lines, the workers can't possibly complain about their T&Cs being changed, as they simply aren't. Yet, we'd have a lot more tax revenue. As there is no doubt taxes have to rise, surely it is fair that in all areas of taxation, it is those with incomes above average that have to bear an above average level of tax increases - we need to change the structure so that those at the bottom of the earnings heap don't suffer too much, but those on average and above average incomes take more of a hit.

As long as you include private pensions?

Old_Slaphead

StevieJ wrote: »

As long as you include private pensions?

Think the suggestion was for all occupational pensions.

To include direct contribution schemes where employer pays a small amount (say below 6% ?) and the employee bears all the investment risk it would be unfair but other than that - interesting idea Pennywise

StevieJ

Old_Slaphead wrote: »

Think the suggestion was for all occupational pensions.

To include direct contribution schemes where employer pays a small amount (say below 6% ?) and the employee bears all the investment risk it would be unfair but other than that - interesting idea Pennywise

Yes I know but over £10k and paying 40% is a little extreme don't you think especially seeing as some high rollers have been gaining 40% tax relief on their pensions over the years.

Old_Slaphead

StevieJ wrote: »

Yes I know but over £10k and paying 40% is a little extreme don't you think especially seeing as some high rollers have been gaining 40% tax relief on their pensions over the years.

Maybe the £10k ceiling is a bit low (say £20k ???) but it was only an idea Stevie....not sure that badgerman will definitely go with it :sad:. Anyway many of the people with largish payouts in occy schemes will have also have benefited from 40% relief so deserve to pay penal rates