How Rishi can plug the funding gap

Newnoel

The time is now coming when the government will need to start paying for its recent largesse in addressing the Covid crisis.

 The size of the challenge is huge, but we need to consider fairness and ease of implementation in some of these areas.

Some suggestions from me...

Spending cuts:

1. Eliminate all public sector defined benefit pensions: DB pensions are now a distant memory for most of the private sector, as they are hugely expensive. At a minimum, DB pensions in the public sector should be closed to new joiners, or capped at say £50k per annum to reduce the ongoing cost and long term liability
2. Reduce public service reliance on external consultants: The Big4 accounting firms and all the major IT companies have entire divisions dedicated to Government “advice”. These resources often cost thousands per day, and are substantially more expensive than public servants. Surely we should be trying to develop decent internal capability to service taxpayers, rather than making accounting partners even more wealthy?
3. Travel policy: A small one and definitely not something to be addressed until Covid is under control, but it amazes me that so many flights are business class. I know my own employer has long since had a policy that all flights, irrespective of duration are economy class. We should be really challenging all travel budgets, both domestic and international, to see which ones can now be done on Zoom, Skype etc, rather than  jumping in a plane, train, or automobile

 

Tax changes:

1. Pension carry forward: At present, the annual allowance is up to £40k, which can be carried across up to three years to total £120k, meaning a 45% (plus 2% NI) taxpayer could save over £56k at the stroke of a pen. Most other allowances (TFA, ISA, etc) are only permitted on an annual basis with no carry forward. Pensions should be on a similar basis
2. Chewing gum tax: It costs councils and small businesses a small fortune to clean up gum. There should be a 50p tax per packet to discourage this disgusting habit.
3. National Insurance equalization: National Insurance should be reduced to say 7% and levied on all sources of income irrespective of age to include rents received, dividends, capital gains, and pension incomes. The upper income cap should be removed.
4. Dividend income: The tax free allowance should be reduced to £1,000 for standard rate taxpayers and £500 for higher rate taxpayers in line with the treatment of bank interest

JJ_Egan

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badmemory

Definitely agree with reducing dependence on external consultants.  But if they did how would they fund their pals?  So that is not going to happen.  As for NI - I never could understand why I no longer paid NI on earned income once I reached state pension age.  However, as the gov has so many over pension age still working (more pals again) - that is not going to happen either.  If you start charging NI on state pensions then it will lead to either a massive outcry or a one off increase to compensate (like the winter fuel allowance).  It is believed that a large no of OAPs vote tory (not this one) so that isn't going to happen either.  In the end it will boil down to screwing the poor down even further.  They are not going to increase taxes on dividends - pals again.  Basically we are back down to those who cannot afford to pay are those who will be paying, nothing new there then.  Pay freezes - nothing new there.

Newnoel

There would be no NI on the star pension, as NI doesn't kick in until £183 per week. The state pension is below this level