Should the triple lock be scrapped in the 6 March Budget?

Grumpy_chap

MK62 said:

the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

I have to admit, I am rather looking forward to the thread "Will a new helicopter be considered deprivation of assets ahead of UC claim?"

BlackKnightMonty

Yes it should be scrapped

Grumpy_chap said:

MK62 said:

the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

I have to admit, I am rather looking forward to the thread "Will a new helicopter be considered deprivation of assets ahead of UC claim?"

They do pay a lot of wealth taxes instead.

Though these can be much less than income tax.

Grumpy_chap

BlackKnightMonty said:

Grumpy_chap said:

MK62 said:

the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

I have to admit, I am rather looking forward to the thread "Will a new helicopter be considered deprivation of assets ahead of UC claim?"

They do pay a lot of wealth taxes instead.

Though these can be much less than income tax.

Please enlighten me - I was not aware that we had taxes on wealth as such.
Their companies will pay corporation taxes.
There is CGT and IHT, but this cohort employ experts to ensure those taxes have limited impact.

NedS

Grumpy_chap said:

MK62 said:

the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

I have to admit, I am rather looking forward to the thread "Will a new helicopter be considered deprivation of assets ahead of UC claim?"

Don't laugh - with managed migration from tax credits (where capital is disregarded) to UC where capital over £16k is disregarded for 12 months under managed migration, there have been claims for UC from people declaring in excess of £1M in cash savings and landlords declaring 15-20 properties.

So for sure these people exist and have been claiming tax credits for years.

MattMattMattUK

Yes it should be scrapped

MK62 said:

MattMattMattUK said:

MK62 said:

MattMattMattUK said:

The VAT claim has been debunked many times, as "the poor" spend most of their income on rent and food they generally spend very little on goods which attract VAT. Yes, if one takes a headline figure it can appear that they do spend more on VAT, but when one delves into the detail it becomes very clear that there is somewhat of a statistical anomaly created by the wealthy with zero income in one year living off existing funds (loss on trading etc.).

Not according to the ONS.......in 2022 (latest available report) the poorest quintile paid 28.3% of their income on indirect taxes (of which VAT is the biggest component), whereas the richest quintile paid 9%

The richest fifth of people paid 1.9 times more in indirect taxes (£9,000) than the poorest fifth (£4,800) in FYE 2022. However, richer households pay a smaller proportion of their disposable income on indirect taxes (9.0%) than the poorest fifth (28.3%). As such, indirect taxes increased income inequality by 3.5 percentage points as measured by the Gini coefficient.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2022

The ONS article is based on raw income data with no deeper analysis. The issue is that some hugely wealthy people can have low incomes or even make losses (which they carry over for tax purposes) in any one year, but because they still have large reserves their spending is not impacted, they have an income of £0, but spend hundreds of thousands or more on goods which attract VAT. Someone who crystallises losses in one year but buys a new helicopter or restocks their wine cellar could easily be in that situation, they fall into the lowest income quintile because they have zero or negative income for one year, but they continue spending hundreds or thousands or even millions because they have vast reserves.

As an example the raw data shows that the lowest quintile spend 50% of their income on VAT, however that would require them to spend 50% of their income on goods which attract full rate VAT, yet we know from spending data the poorest will be spending more than half of their income on rent. Almost all in that group are in receipt of UC or pension credit with housing elements, where the housing element which covers their rent makes up around two thirds, that means there is not enough required income to reach the 50% of income expended on full rate VAT goods, that is even before one accounts for food, energy and children's clothes. 

So yes, if one looks simplistically at the raw data it appears to be the case, but it is actually an anomaly caused by not accounting for the reality of what is going on and requires a deeper look to get a true picture of the situation. 

The ONS report is based on averages.....and in all averages there are exceptions to that average......but on the whole, the data shows what it shows - and that is, the average lowest quintile household spends >3x more of their disposable income on indirect taxes compared to the average highest quintile household. That doesn't mean that every household will be like that though....it just means that "on average" that's the case.

Averages can only inform on a very basic level, let us take average household income in the UK, it is enough to live on, therefore everything is fine, no need to look further. The bottom quintile is around 16 million adults, an average does not give enough insight into a group that large.

MK62 said:

You appear to be suggesting that the ONS report is flawed because the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

It is flawed. I cannot find the link at the moment but there was an FT article going into this, they showed the anomalies in the data and the distortions that caused. They used the example that in one year, before tax changes came in so wealthy investors crystallised losses, the bottom 1% of earners spent something like 30% of their income on VAT.

MK62 said:

We'd better hope that the ONS data paints a reasonable picture of reality, as the data it's based on is used by government to set policy.

The ONS data is accurate, that report is an analysis, not data. It is also far too simplistic to set fiscal policy, decisions in government would be based on a much more detailed data set with analysis and interpretation by teams of economists and accounting experts, not a simplified ONS report designed for easy interpretation and then talked about by a few people on an internet forum.

MK62 said:

As to "the raw data shows that the lowest quintile spend 50% of their income on VAT", you should really give a link to the raw data which shows this, as it appears to be completely at odds with the ONS report, which shows the lowest quintile spending 12.4% - on average - of their disposable income on VAT.

The ONS link to more complex data from the report, there is also a lot of it available in other parts of the ONS website, some other data on HMRC etc. That ONS report is very simplified, which is why that report is not used to set policy, many more complex reports will be used for that purpose.

MK62

MattMattMattUK said:

MK62 said:

MattMattMattUK said:

MK62 said:

MattMattMattUK said:

The VAT claim has been debunked many times, as "the poor" spend most of their income on rent and food they generally spend very little on goods which attract VAT. Yes, if one takes a headline figure it can appear that they do spend more on VAT, but when one delves into the detail it becomes very clear that there is somewhat of a statistical anomaly created by the wealthy with zero income in one year living off existing funds (loss on trading etc.).

Not according to the ONS.......in 2022 (latest available report) the poorest quintile paid 28.3% of their income on indirect taxes (of which VAT is the biggest component), whereas the richest quintile paid 9%

The richest fifth of people paid 1.9 times more in indirect taxes (£9,000) than the poorest fifth (£4,800) in FYE 2022. However, richer households pay a smaller proportion of their disposable income on indirect taxes (9.0%) than the poorest fifth (28.3%). As such, indirect taxes increased income inequality by 3.5 percentage points as measured by the Gini coefficient.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2022

The ONS article is based on raw income data with no deeper analysis. The issue is that some hugely wealthy people can have low incomes or even make losses (which they carry over for tax purposes) in any one year, but because they still have large reserves their spending is not impacted, they have an income of £0, but spend hundreds of thousands or more on goods which attract VAT. Someone who crystallises losses in one year but buys a new helicopter or restocks their wine cellar could easily be in that situation, they fall into the lowest income quintile because they have zero or negative income for one year, but they continue spending hundreds or thousands or even millions because they have vast reserves.

As an example the raw data shows that the lowest quintile spend 50% of their income on VAT, however that would require them to spend 50% of their income on goods which attract full rate VAT, yet we know from spending data the poorest will be spending more than half of their income on rent. Almost all in that group are in receipt of UC or pension credit with housing elements, where the housing element which covers their rent makes up around two thirds, that means there is not enough required income to reach the 50% of income expended on full rate VAT goods, that is even before one accounts for food, energy and children's clothes. 

So yes, if one looks simplistically at the raw data it appears to be the case, but it is actually an anomaly caused by not accounting for the reality of what is going on and requires a deeper look to get a true picture of the situation. 

The ONS report is based on averages.....and in all averages there are exceptions to that average......but on the whole, the data shows what it shows - and that is, the average lowest quintile household spends >3x more of their disposable income on indirect taxes compared to the average highest quintile household. That doesn't mean that every household will be like that though....it just means that "on average" that's the case.

Averages can only inform on a very basic level, let us take average household income in the UK, it is enough to live on, therefore everything is fine, no need to look further. The bottom quintile is around 16 million adults, an average does not give enough insight into a group that large.

MK62 said:

You appear to be suggesting that the ONS report is flawed because the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

It is flawed. I cannot find the link at the moment but there was an FT article going into this, they showed the anomalies in the data and the distortions that caused. They used the example that in one year, before tax changes came in so wealthy investors crystallised losses, the bottom 1% of earners spent something like 30% of their income on VAT.

MK62 said:

We'd better hope that the ONS data paints a reasonable picture of reality, as the data it's based on is used by government to set policy.

The ONS data is accurate, that report is an analysis, not data. It is also far too simplistic to set fiscal policy, decisions in government would be based on a much more detailed data set with analysis and interpretation by teams of economists and accounting experts, not a simplified ONS report designed for easy interpretation and then talked about by a few people on an internet forum.

MK62 said:

As to "the raw data shows that the lowest quintile spend 50% of their income on VAT", you should really give a link to the raw data which shows this, as it appears to be completely at odds with the ONS report, which shows the lowest quintile spending 12.4% - on average - of their disposable income on VAT.

The ONS link to more complex data from the report, there is also a lot of it available in other parts of the ONS website, some other data on HMRC etc. That ONS report is very simplified, which is why that report is not used to set policy, many more complex reports will be used for that purpose.

I didn't say this report was used to set policy - I said the data it's based on is used to set policy (the Household Finances Survey..... a combination of the Living Costs and Food Survey (LCF) and Survey on Living Conditions (SLC)......and these are certainly used to set policy, though I didn't claim this is the only data)

You can argue that the ONS is wrong, and their report is flawed, but you really need a little more than a 

reference to an article in the FT........

MattMattMattUK

Yes it should be scrapped

There is an article which covers the same principle over all taxation, I cannot find the FT article on my phone as the paywall makes searching a pain. 

https://www.resolutionfoundation.org/comment/no-the-poorest-dont-pay-higher-taxes-than-the-richest/

You can argue some very simplified data says something, but that does not make that observation useful or insightful...... 

eltisley98

MK62 said:

MattMattMattUK said:

MK62 said:

MattMattMattUK said:

The VAT claim has been debunked many times, as "the poor" spend most of their income on rent and food they generally spend very little on goods which attract VAT. Yes, if one takes a headline figure it can appear that they do spend more on VAT, but when one delves into the detail it becomes very clear that there is somewhat of a statistical anomaly created by the wealthy with zero income in one year living off existing funds (loss on trading etc.).

Not according to the ONS.......in 2022 (latest available report) the poorest quintile paid 28.3% of their income on indirect taxes (of which VAT is the biggest component), whereas the richest quintile paid 9%

The richest fifth of people paid 1.9 times more in indirect taxes (£9,000) than the poorest fifth (£4,800) in FYE 2022. However, richer households pay a smaller proportion of their disposable income on indirect taxes (9.0%) than the poorest fifth (28.3%). As such, indirect taxes increased income inequality by 3.5 percentage points as measured by the Gini coefficient.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2022

The ONS article is based on raw income data with no deeper analysis. The issue is that some hugely wealthy people can have low incomes or even make losses (which they carry over for tax purposes) in any one year, but because they still have large reserves their spending is not impacted, they have an income of £0, but spend hundreds of thousands or more on goods which attract VAT. Someone who crystallises losses in one year but buys a new helicopter or restocks their wine cellar could easily be in that situation, they fall into the lowest income quintile because they have zero or negative income for one year, but they continue spending hundreds or thousands or even millions because they have vast reserves.

As an example the raw data shows that the lowest quintile spend 50% of their income on VAT, however that would require them to spend 50% of their income on goods which attract full rate VAT, yet we know from spending data the poorest will be spending more than half of their income on rent. Almost all in that group are in receipt of UC or pension credit with housing elements, where the housing element which covers their rent makes up around two thirds, that means there is not enough required income to reach the 50% of income expended on full rate VAT goods, that is even before one accounts for food, energy and children's clothes. 

So yes, if one looks simplistically at the raw data it appears to be the case, but it is actually an anomaly caused by not accounting for the reality of what is going on and requires a deeper look to get a true picture of the situation. 

The ONS report is based on averages.....and in all averages there are exceptions to that average......but on the whole, the data shows what it shows - and that is, the average lowest quintile household spends >3x more of their disposable income on indirect taxes compared to the average highest quintile household. That doesn't mean that every household will be like that though....it just means that "on average" that's the case.

You appear to be suggesting that the ONS report is flawed because the lowest income quintile must include millionaires who spend "hundreds or thousands or even millions" but who simultaneously have little or no annual income.

We'd better hope that the ONS data paints a reasonable picture of reality, as the data it's based on is used by government to set policy.

As to "the raw data shows that the lowest quintile spend 50% of their income on VAT", you should really give a link to the raw data which shows this, as it appears to be completely at odds with the ONS report, which shows the lowest quintile spending 12.4% - on average - of their disposable income on VAT.

I think the point missed is that VAT payment is discretionary. You don't have to spend, and hence pay VAT, if you don't want to buy/enjoy stuff. True, not most essential things are VAT free or VAT reduced, but many do attract little or no VAT, certainly not as much as 12.4%. 

If we are to believe that the poorest 20% of households face the gloomy choice between food and heat, with nothing to spend on anything else, then I don't quite understand why they pay 12.4% of their total income on VAT.

bownyboy

No it should be kept

The triple lock helped bring millions of pensions out of poverty. How anyone can say we should be reducing the pension is beyond me.

Also we have all paid into the pension fund for 30 or 35 years just to get the minimum. Most get much less.

Instead of finding ways to take away increases for retirees, how about we push for better living standards for all? How about we get annoyed or angry about big corporations paying little or not tax or our PM whose wife was a nom-dom for many years meaning she paid less to our NHS and schools?

The press in this country is very good at directing anger to those less able to defend themselves rather than pointing the finger at those who have massive wealth and who manage to pay less tax via legal routes.

Exodi

Yes it should be scrapped

https://www.moneysavingexpert.com/poll/2023/mse-annual-census-2023/
Nearly 60% of this forum is in their late 50's or older. 

You didn't need to do this poll, the results were obvious. It's the whole reason we enjoy the inherently unsustainable triple lock in the first place- because the same demographic also turn up to vote and the reality is, people vote for things that benefit them.

The triple lock is a vote winner, it is nothing about equality or economics, it's about keeping the older people on side. Outside of virtue signalling, no-one close to retirement/retired actually cares about the ever-increasing burden on taxpayers, because [insert something about having 'paid into the system'] (despite usually being net beneficiaries of the tax system) or [insert some vague notion of having 'worked hard'].

Just look at the last couple of years. Inflation surges in 2022-2023, pensioners enjoy a 10.1% increase on account of inflation. Workers wages then increase in response to that inflation in 2023-2024 and pensioners scoop in again and enjoy a 8.5% increase this time on account of worker pay increases; an obvious double dip (and that's not even mentioning that this was calculated during the month many public sector workers received one off bonuses, meaning the earnings figure was higher than it should have been. But even the idea of removing the bonuses from the equation and increasing pensions by a meagre 7.8% would cause uproar among pensioners which politicians couldn't be bothered to deal with).

I think the icing on the cake is that most people not nearing retirement are painfully aware that the mickey mouse state pension increases can't last forever, so can look forward to an inevitable gutting of the state pension in the future, and/or it becoming means tested, and/or being told to work to 70, 80, who knows. All while being forced to increasingly subsidise pensioners in the mean-time under the outdated guise that all pensioners are poor.

But I get that I'm not going to convince turkeys to vote for Christmas, and clearly there are a lot of turkeys on this forum. Good on you guys I guess, I certainly wish I got a cumulative 19.5% increase over the past two years, but I think that is only the stuff of dreams for workers unfortunately.

Now, as usual, time for the heart-wrenching tales about destitute pensioners in response.