Pension Stealth Taxes

Clive_Butcher

Has a petition been set up or started to try to encourage the government to rethink the policies they may implement in the 16th March 2016 budget.

greenglide

A petition to change something that hasnt been changed or proposed to change yet?

Seriously?

I think not.

kidmugsy

What stealth tax on pensions do you expect to be introduced?

Paul_Herring

Ò_o


Interesting post to make as your first after joining the site....

PensionTech

I am personally running a campaign to get my boss to rethink whether he will offer me a bonus/payrise/promotion/redundancy/firing/nicer office chair at any point in the near or distant future. I will take it to tribunal if need be. But then he is also running a campaign to get me to rethink taking him to tribunal for the changes that he may or may not make to my employment contract or payroll or furnishings during the remainder of our lifetimes. Care to sign our petitions?

Malthusian

Blimey, a few people got out of bed on the wrong side this morning.

A cursory search would have revealed there is actually a petition on the UK Parliament website here. It only has 5,888 signatures at present and is, as the snarks would agree, unlikely to get much traction while there aren't any official proposals to protest against.

The Daily Heil has also been running a front-page campaign for some weeks against the proposals to remove higher rate relief or the entire principle of tax relief on pension contributions.

Rather than wait to sign an ineffective petition, why not write to your MP and urge him to oppose any such stealth taxes? There are already widespread reports that many backbench MPs will oppose Osborne if he attempts to introduce such measures. Urging your MP to join them would have a far greater chance of having an actual effect than yet another petition.

Paul_Herring

Malthusian wrote: »

Blimey, a few people got out of bed on the wrong side this morning.

As opposed to any particular other morning?

PensionTech

Blimey, a few people got out of bed on the wrong side this morning.

Well, you have to admit it's a bit daft.

A cursory search would have revealed there is actually a petition on the UK Parliament website here.

That is even more daft.

Urging your MP to join them would have a far greater chance of having an actual effect than yet another petition.

Well, I wonder about this. WASPI have proven that a well-organised (if completely ridiculous) petition and social media campaign can be effective at getting the two main opposition parties on board. Any cuts to higher-rate tax relief (which is likely to be a result of whatever changes are made, unless Gideon backs out altogether) is already going to be unpopular with many Tories, where a schism is already developing on this and other issues. It might, however, be backed by Labour/SNP, particularly if it comes at a benefit to lower-paid workers. So what's needed is a way of getting the opposition on side - and that might be a huge showing of public support providing a nice bandwagon to jump on, rather than individual lobbying to appeal to their principles which are probably aligned with this anyway.

Speculation upon speculation upon rambling upon speculation...

greenglide

If the Chancellor does do anything at all, in what way is it (whatever it is) "a stealth tax"?

Still confused!

Paul_Herring

PensionTech wrote: »

So what's needed is a way of getting the opposition on side - and that might be a huge showing of public support providing a nice bandwagon to jump on, rather than individual lobbying to appeal to their principles which are probably aligned with this anyway.

Could always start up a facebook page with the more esoteric and unpalatable demands on it for everyone affected (and a few stragglers of course) to comment on, and only casually reference it on the petition which only has the stuff that most could agree with, even if the other unmentioned stuff is a bit dodgy...


Nah. Would never work - people wouldn't fall for it; forget I mentioned it.

Paul_Herring

greenglide wrote: »

If the Chancellor does do anything at all, in what way is it (whatever it is) "a stealth tax"?

It's imposing tax without specifically mentioning it's a tax.


For example the pension ISA's being mooted. Everyone who knows about such things realise that they're funded out of post-tax income, with growth and withdrawals being tax free. If the government agree to top up any contributions going in, it looks 'on the face of it' to be very similar to how stuff works at the moment only with "tax free withdrawals!!!"

But it's funded out of post-tax income - it has already been taxed. And the gov contribution is likely to be less than the current situation where

1) Higher rate taxpayers get higher rate tax refunded - won't happen with ISAs
2) Those using salary sacrifice can get up to 12% employee and 13.8% employer NI put into the fund as well - certainly won't happen with ISAs.

The difference between the tax saved now vs the tax rebated for the ISA's is the 'stealth tax.'

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Another 'stealth tax' of sorts is the likes of Excise Duty.

£(sinful_product */+ excise duty) * VAT. So you pay the 'duty tax' then get to pay VAT on the amount of duty - double dipping.

A particularly egrigious example is a packet of £6 fags. £1 is VAT. £4.46 is (pre-VAT) excise, with the result that 91% of that £ being tax in one form or another.

I fully expect that the 20% sugar tax that Oliver et al. keep banking on about works the same way, so that effective tax on a bottle of fizzy drink would acutally be 44%.

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Fiscal drag is another form of 'stealth tax.' Not raising the 40% income tax limit in line with rises in employee remuneration, but either leaving it static, using a lower metric for raising it (CPI seems to be a favourite when it's low,) or even (as has happened recently) reducing it, for example.