Personal Allowances - Ouch!

snooloui

MaxiRobriguez said:

Thrugelmir said:

MaxiRobriguez said:

Well, that budget was one way to say austerity was a political choice I guess.

Lot's of spending, very little in the way of paying it off. Big assumptions that all that new money is going to lead to investment and productivity. 

In the middle of a pandemic. Little else that can be done.  Better to attract investment into new ideas than simply bid up stock markets to ever increasing levels of valuation. 

I don't disagree but it is counter to the endless stream of "debt bad" that has been used against Labour who racked it up to avert the worst of the GFC. 

Note too these new giveaways and spending will be happening *after* the pandemic subsides, not during. 

I suppose the key difference is optics. The actions taken by the Government because of Covid-19 are seen by the majority as necessary and unavoidable whereas during the financial crisis it was seen as bailing out big banks at the expensive of the average person. For that reason, I think the Conservatives will avoid a similar backlash provided that the economy does recover well and doesn't get bogged down in the next few years.

polymaff

talexuser said:

Up to 12570 and 50270 but frozen from 2022 to 2026. Well the borrowing has to be paid for somehow, but this might sting if inflation takes off in the meantime.

This has been a wh0re's drawers since Rooker-Wise - and a spit in the lake relative to a percent or two on the Basic Rate?

[guess what I had to edit]

Thrugelmir

MaxiRobriguez said:

Thrugelmir said:

MaxiRobriguez said:

Well, that budget was one way to say austerity was a political choice I guess.

Lot's of spending, very little in the way of paying it off. Big assumptions that all that new money is going to lead to investment and productivity. 

In the middle of a pandemic. Little else that can be done.  Better to attract investment into new ideas than simply bid up stock markets to ever increasing levels of valuation. 

I don't disagree but it is counter to the endless stream of "debt bad" that has been used against Labour who racked it up to avert the worst of the GFC. 

Light regulation of financial services , i.e. copying the US and Greenspan, falls on one man. All the future holds is more tax rises. 

zagfles

snooloui said:

MaxiRobriguez said:

Thrugelmir said:

MaxiRobriguez said:

Well, that budget was one way to say austerity was a political choice I guess.

Lot's of spending, very little in the way of paying it off. Big assumptions that all that new money is going to lead to investment and productivity. 

In the middle of a pandemic. Little else that can be done.  Better to attract investment into new ideas than simply bid up stock markets to ever increasing levels of valuation. 

I don't disagree but it is counter to the endless stream of "debt bad" that has been used against Labour who racked it up to avert the worst of the GFC. 

Note too these new giveaways and spending will be happening *after* the pandemic subsides, not during. 

I suppose the key difference is optics. The actions taken by the Government because of Covid-19 are seen by the majority as necessary and unavoidable whereas during the financial crisis it was seen as bailing out big banks at the expensive of the average person. For that reason, I think the Conservatives will avoid a similar backlash provided that the economy does recover well and doesn't get bogged down in the next few years.

It wasn't the bailouts that were the problem, it was that govt spending had been increasing unsustainably in the credit fuelled boom before the GFC, because Brown though he'd abolished "boom and bust". So called "austerity" was just reversing a few years of public spending increases from around 2001-2007 because they were based on public finances in a credit fuelled bubble that they expected to continue forever, rather than burst.

One off massive govt spending is OK, just as one off big personal spending (eg a new house or car) is fine providing income isn't consistently below expenditure and you can afford to service your debts. Debt isn't bad, ongoing big budget deficit is. The problem post the GFC wan't the cost of the bailouts, it was the fall in GDP and realisation we aren't as rich as we thought we were. 

sevenhills

talexuser said:

Up to 12570 and 50270 but frozen from 2022 to 2026. Well the borrowing has to be paid for somehow, but this might sting if inflation takes off in the meantime.

It will affect low earners the most, are there other measures that affect high earners more?

zagfles

sevenhills said:

talexuser said:

Up to 12570 and 50270 but frozen from 2022 to 2026. Well the borrowing has to be paid for somehow, but this might sting if inflation takes off in the meantime.

It will affect low earners the most, are there other measures that affect high earners more?

Higher rate threshold also frozen, pension lifetime allowance frozen, increase in corp tax which would likely reduce dividends for those who own shares & funds, likely to be higher earners, IHT threshold frozen, CGT threshold frozen.

Thrugelmir

Since 2010. The annual personal tax allowance has actually risen in real terms by 60%. In this context a few years of a freeze still leaves people better off. 

cricidmuslibale

Thrugelmir said:

Since 2010. The annual personal tax allowance has actually risen in real terms by 60%. In this context a few years of a freeze still leaves people better off. 

True but the £6,475 personal tax allowance back in 2009 was generally seen as too low to be reasonable as some of the very lowest paid workers back then were having to pay income tax on a proportion of their wages; that said, to be fair to Alistair Darling (C of the E back then), he actually raised it to £6,475 from a much lower level of less than £5k when Gordon Brown was C of the E and when the very lowest paid workers were even worse off in this respect! Thus the initial aim of getting it to £10,000 in stages (originally a Liberal Democrat idea btw that the coalition government from 2010 adopted) was a laudable one that took the very lowest paid out of income tax altogether, although not National Insurance in some cases. One could fairly argue however that subsequently raising it to £12,500 (soon to be £12,570) only a few years later has been more generous than necessary over such a short time period, especially when inflation has been low or very low almost throughout this period, and thus it is probably not unreasonable at all in the present circumstances to maintain the personal allowance at £12,570 over the next five years as long as inflation is not allowed to get out of control during this time.

ZeroSum

They've also froze the NI ones & thereby breaking an election promise.
Which strangely hasn't been mentioned, think people seem to forget about NI which discussing tax

zagfles

ZeroSum said:

They've also froze the NI ones & thereby breaking an election promise.
Which strangely hasn't been mentioned, think people seem to forget about NI which discussing tax

No they haven't. They promised to raise the NI primary threshold to £9500, which they did last year. They also mentioned some vague "ambition" to eventually raise the PT to £12500 but no target date