How Rishi can plug the funding gap
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...
- 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
- 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?
- 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
- 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
- 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.
- 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.
- 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