Jeremy Hunt shifting the tax burden towards pensioners

[JohnD]

As a tax-raising government, the Tories have frozen Personal Allowances so that inflation increases the tax take and draws more low-income people into paying income tax.

Interestingly, Jeremy, and Rishi before him, has a policy of making tiny reductions in National Insurance, though they are outweighed by the Income Tax rises.

This has the effect of slightly reducing the unfair extra burden on working people, and increasing the proportion on those with income not derived from working.

As a retired person myself, I have no objection to this. There are far too many free handouts and tax breaks given to the prosperous and precious few for those workers on low earnings.. And pensions are one of the largest sources of wealth in the country.

Strangely, Jeremy has not trumpeted this policy of rebalancing. Is he afraid of alienating his core support of elderly party members?

 

[Murdochcat]

We will all be paying more (well not me ) for the next few years.

What he needs to do is reduce the higher rate threshold for pensioners so he claws back the freebies given to wealthy pensioners

This is no surprise so let’s just accept it

 

[JohnD]

Why would he not increase it equally for wealthy people who are not pensioners?

 

[Murdochcat]

Why would he not increase it equally for wealthy people who are not

The way I read it is that by reducing NI makes workers deductions reduce and by increasing tax on all means people who don’t work all contribute more.

I do think reducing the upper rate tax threshold for pensioners is the easiest way to claw back the freebies

Silence on this from the main opposition so it makes me wonder what they are going to do

 

[ajohn]

If they drop NI and shift that to income tax this will mean pensioners paying more tax.

 

[Notch7]

The way I read it is that by reducing NI makes workers deductions reduce

You mean reducing NI slightly lowers the £80b of tax rises by the Conservative govt.

Overall workers pay more tax not less.

Hunt is lying when he claims he is lowering tax.

 

[big-all]

when i retired almost exactly 5 years ago i paid no tax nothing has changed other than annual increases i have gone from around £12'200 no tax to around £14'500 so tax on £2300 or £460 now not a kings ransom but just over 3% off my pension or 1/5th off any annual increase

 

[ajohn]

Hunt is lying when he claims he is lowering tax.

I'm curious about just how reducing NI by the amount used gets more people in work. The sums
– Employees earning up to £123 per week have no contributions.
– Those earning between £123 and £967 per week pay a rate of 10% on earnings within this range.
– Any earnings above £967 per week incur a reduced rate of 2%.

Worth £128 to £1005 PA to people in the 10% range that's now 8. It's pretty clear what income is in need of the extra money but get more in work - really? Earn more than ~£50k and the rate drops.

There are fairer ways of calculating taxation. For instance make the amount above £123 income/967x10%. The £50k would have to be raised to make up the deficit. An alternative - a lot more tax break points or more complex sums to produce a curve rather than a straight line. That's what more break points can do. Eg the US, The simple way Germany.

 

[Murdochcat]

Simplification of NI and tax is long overdue.

Everybody likes moaning about it but nobody has the balls to state what they want to do

Obviously low earners get UC to which is free from tax and NI

 

[motorbiking]

Why would he not increase it equally for wealthy people who are not pensioners?

because they already pay vastly more tax than everyone else?

 

[motorbiking]

You mean reducing NI slightly lowers the £80b of tax rises by the Conservative govt.

Overall workers pay more tax not less.

Hunt is lying when he claims he is lowering tax.

Some workers. Certainly those in the top 10%

 

[JohnD]

Why would he not increase it equally for wealthy people who are not pensioners?

I don't see why a pensioner with a taxable income of £100,000 should pay different tax to a non-pensioner with a taxable income of £100,000.

Seemingly motorbiking disagrees.

 

[JonathanM]

The big question, for me, which I have touched on before, is what do we do if this period of low economic growth becomes the norm. Normally we have relied on growth to balance the books. An ageing population and low economic growth means some very big decisions.

 

[JohnD]

it's the ageing population that has most of the wealth

so if the purpose of taxes is to raise money, it's normal to try and get it from the people who have it.

Coincidentally, it's also the ageing population that makes the biggest demands on public services such as health and social care.

I am retired now and prepared to pay my share.

 

[JonathanM]

I posted this a couple of weeks ago. Would any of this help?

More public spending is within Labour’s grasp – here’s how it could find an extra £90bn a year | Richard Murphy

Five simple policy ideas could generate billions for a Labour chancellor and end the threat of continued austerity, says Richard Murphy of Sheffield University

www.theguardian.com