Con-Lib agreement on a £10k personal allowance for income tax?

StevieJ

kabayiri wrote: »

It's one thing I never did understand with the last big system introduced :- tax credits. It felt like a cumbersome way of taking away with one hand only to hand back with the other hand to me.

I disagree, they were brought in when the (Tory) press were making the point that some people (who wished to work) were worse off working than living off state benefits. The thought was a good one, maybe the application not so good.

mbga9pgf

zygurat789 wrote: »

The old are notoriously conservative , it will all go int bank deposit accounts and we all know that banks don't led to new businesses.

They did before monetarisation.

mitchaa

ninky wrote: »

although the stats show that actually 50 percent of women now earn as much or more than their husband/partner. i earn way more than mine.

Do they?

I do not think that is right for the most obvious of reasons. I would suspect it's less than 20% and nowhere near 50%

abaxas

I dislike this idea.

As a society everyone should contribute. Even if it's 20p or £200,000, I dont care. They should contribute.

mitchaa

mbga9pgf wrote: »

I agree. I would support this policy, despite it costing me around 1500 extra a year in income tax,

Why would a personal allowance of £10k cost you a lot more in income tax? It would surely put an extra £1410pa into your pocket assuming your wife is also working. (10k - £6475 = £3525 increase. 20% of £3525 = £705)

I'm not quite sure on the LD plans for this and what happens to the higher rate band, does it come down or stay the same?

kabayiri

StevieJ wrote: »

I disagree, they were brought in when the (Tory) press were making the point that some people (who wished to work) were worse off working than living off state benefits. The thought was a good one, maybe the application not so good.

I guess it was a communications issue as much as anything, in truth.

Calling them 'Working Tax Credits' when they didn't only apply to working people, well...it's bound to confuse.

Running costs were always considered optimistic, and this was born out when it went live. The application was poor in that respect.

From what you say StevieJ, do you think it could have acted as a subsidy to low paid people..in effect taking the burden off the employer?

zygurat789

mitchaa wrote: »

Why would a personal allowance of £10k cost you a lot more in income tax? It would surely put an extra £1410pa into your pocket assuming your wife is also working. (10k - £6475 = £3525 increase. 20% of £3525 = £705)

I'm not quite sure on the LD plans for this and what happens to the higher rate band, does it come down or stay the same?

But this is only true for those earning at least £10,000 and with two jobs in the household. The fortunate ones!

mitchaa

zygurat789 wrote: »

But this is only true for those earning at least £10,000 and with two jobs in the household. The fortunate ones!

Mbga9pgf earns around £50k as an RAF officer if i remember correctly. Not sure if his wife works but can't see why he would be out of pocket.

Mr_Mumble

kennyboy66 wrote: »

I thought 2.5% on VAT would bring in closer to £13bn, taking it to 21% would raise £18bn.

My own ridiculously simple dodgy math: (20/17.5) * £78bn - £78bn = £11.14bn but of course this ignores some revenue comes from 5% rated products and a possible fall in consumption, so, the figure of £10bn I'd heard doesn't seem that far off? £78bn is the Treasury estimate for government VAT receipts for 2010/11.

zygurat789 wrote: »

So the single parent on £6500 pa will get no tax benefit and lower tax creits.

The Conservative manifesto states tax credits will only be withdrawn for households with incomes above £40,000 - it seems highly unlikely they could get through measures that reduced tax credits on household incomes much below that, certainly not £6,500! Of course someone on such a low income may have to worry about other benefit losses but even Labour were committed to rejigging the likes of housing benefit.

People struggling on two part time jobs will pay more tax than they did NIC
If vat is increased those with the lowest disposable incomes are hit hardest.

Those working 2-3 part-time jobs on lower incomes may be worse off relative to others on low incomes after the changes but they wouldn't be worse off than before, assuming, there is little change to NICs (which admittedly would make the system more complex as the aligning of NIC and income tax bands that was taking place would presumably be abandoned.)

Agree on the VAT thing, it is relatively regressive compared with most other taxes. I don't personally like VAT but it is a very easy way for politicians to raise money. Our VAT rate is already very high compared to most non-EU first world countries: Japan (5%), Canada (5% national + small regional), Switzerland (8%), US sales tax (nil to about 10%), Australia (10%), South Korea (10%) and New Zealand (12.5%). Its only Europe that consistently has such high consumption taxes and oddly enough economists say Europe, especially Germany, doesn't consume enough!

Thrugelmir

zygurat789 wrote: »

But there are those, single parents with two pre-school age children, who are totally unable to go to work.
This is taking your tory dogma too far.

Child poverty is still rising. Despite Labour's 2005 pledge to reduce it. A fundamental reform of the tax \ credit system is required.

I know of single people with school aged children who have found work to fit their childcare and school arrangements. By no means easy but possible.