Tax cuts planned by Johnson carry hefty price tag - think tank

[Jonathan Fairfield]

Tax cuts planned by Johnson carry hefty price tag - think tank

 

 

LONDON (Reuters) - Tax cuts planned by Boris Johnson, the leading candidate to become Britain’s next prime minister, could cost as much as 20 billion pounds a year, according to calculations from the Institute for Fiscal Studies think tank.

 

Johnson, who is vying for the votes of Conservative Party members in a run-off against foreign minister Jeremy Hunt, has proposed raising the threshold at which higher-rate income tax is payable to 80,000 pounds a year from 50,000 pounds.

 

Cutting tax on these earnings to 20% from 40% would cost the public finances around 9 billion pounds a year, and benefit the highest-earning 10% of Britons, the IFS said on Tuesday.

 

To put that figure into context, Britain’s official budget forecasters expect a 29 billion-pound budget deficit this year, assuming there is an orderly Brexit, and to raise total revenues of 811 billion pounds.

 

Johnson has also suggested raising the point at which workers are liable for the 12% National Insurance (NI) payroll tax, which currently applies to annual earnings above 8,632 pounds.

 

The IFS said each thousand-pound increase in the NI threshold would cost the government 3 billion pounds a year.

 

Raising the NI threshold to the 12,500 pound mark at which income tax first becomes payable would cost at least 11 billion pounds. It would remove 2.4 million low-paid workers from the levy.

 

“It is not clear that spending such sums on tax cuts is compatible with both ending austerity in public spending and prudent management of the public finances,” IFS economist Tom Waters said.

 

Hunt has proposed his own tax cuts, arguing for a reduction in the rate of tax on company profits to 12.5% from the 17% to which it is due to fall to in April 2020, as well as scrapping property taxes for small businesses.

 

Chancellor of the Exchequer Philip Hammond has written to Johnson and Hunt, urging them to respect his fiscal goals to keep the annual budget deficit below 2% of economic output and ensure that outstanding debt falls in percentage terms too.

 

-- © Copyright Reuters 2019-06-25

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[dick dasterdly]

Wow, really - biased much??

 

I'm inclined to agree that raising the 50,000 threshold to 80,000 for higher rate tax is probably a good idea, but I have no idea why the following is berated by the article?

 

"Johnson has also suggested raising the point at which workers are liable for the 12% National Insurance (NI) payroll tax, which currently applies to annual earnings above 8,632 pounds."

 

Surely a good move!

 

I've lost track of NI rates, but know there used to be a 'cut off' level, so that those on higher salaries didn't have to pay NI beyond that 'poor/average' salaries level......

 

 I gather (but could be wrong) that nowadays the highest paid have to pay 2%, whilst the lowest paid pay 12%?

 

[dick dasterdly]

"The IFS said each thousand-pound increase in the NI threshold would cost the government 3 billion pounds a year.

Raising the NI threshold to the 12,500 pound mark at which income tax first becomes payable would cost at least 11 billion pounds. It would remove 2.4 million low-paid workers from the levy.

 

“It is not clear that spending such sums on tax cuts is compatible with both ending austerity in public spending and prudent management of the public finances,” IFS economist Tom Waters said."

 

It's just sad the way these people are determined that the poor should bear a heavier weight than the wealthy. ☹️

[BritManToo]

37 minutes ago, dick dasterdly said:

I gather (but could be wrong) that nowadays the highest paid have to pay 2%, whilst the lowest paid pay 12%?

I believe employers contribution is 10% with no cap, so the actual NI charges range from 12% to 22%.

(Let's face it the employers just pay a 10% lower wage to get their contribution back)

 

If I were in charge of taxation, I'd set a maximum wage and tax at 100% above that.

Nobody is worth more than 250k/year (insert maximum of your choice).

 

I'd also tax business on where they do their business, rather than what country their HQ is in.

No free ride for Amazon/Starbucks/Boots et al.

Edited June 25, 2019 by BritManToo

[billd766]

More ifs, buts, maybes, perhaps etc.

 

In fact more whataboutery.

[theoldgit]

36 minutes ago, dick dasterdly said:

 I gather (but could be wrong) that nowadays the highest paid have to pay 2%, whilst the lowest paid pay 12%?

As I recall, everybody pays the standard rate and there used to be a maximum amount of earnings that you paid NI, then one Chancellor charged a rate with no upper limit at, I think, 1% initially for those earning above the maximum for the standard rate. 

I suspect over the years that higher rate has increased, though those affected still pay the standard rate of the first part of their earnings.

[RuamRudy]

A benefit for the top 10% of UK earners, which has to be paid for by cuts made elsewhere. I don't believe that anyone is fooled any more by the lie of 'trickle-down economics' so the only people who will benefit are those 10%, while the country in general will pay the cost. This is nothing other than a promise to the Tory rank and file in advance of the leadership vote. 

[Dumbastheycome]

In most ways I wish there was, yet at the same time grateful there is  not, a concurrent satirical series  of  "Yes Minister".

I would  die  laughing !

[Baerboxer]

10 hours ago, RuamRudy said:

A benefit for the top 10% of UK earners, which has to be paid for by cuts made elsewhere. I don't believe that anyone is fooled any more by the lie of 'trickle-down economics' so the only people who will benefit are those 10%, while the country in general will pay the cost. This is nothing other than a promise to the Tory rank and file in advance of the leadership vote. 

 

I'm sure the Tories who supported Brexit from day one don't actually give a toss about sovereignty, "taking control back" and all that hogwash for the plebs. It's about them taking control of the country, putting the power and wealth in the hands of the few, which includes themselves of course. They never liked these pesky EU laws about human rights, or workers rights. 

 

As long as the rich get tax cuts and applaud, Boris and his ilk won't give a fig about social services, the poor, the handicapped and disadvantaged.  

 

Which ultimately will let Corbyn is who wants to implement tried and failed policies!

[evadgib]

8 hours ago, Dumbastheycome said:

In most ways I wish there was, yet at the same time grateful there is  not, a concurrent satirical series  of  "Yes Minister".

I would  die  laughing !

If BJ gets in Gervais and Marchant will soon knock one up ????

[RuamRudy]

8 hours ago, Baerboxer said:

 

I'm sure the Tories who supported Brexit from day one don't actually give a toss about sovereignty, "taking control back" and all that hogwash for the plebs. It's about them taking control of the country, putting the power and wealth in the hands of the few, which includes themselves of course. They never liked these pesky EU laws about human rights, or workers rights. 

 

As long as the rich get tax cuts and applaud, Boris and his ilk won't give a fig about social services, the poor, the handicapped and disadvantaged.  

 

Which ultimately will let Corbyn is who wants to implement tried and failed policies!

I have never voted labour in my life and I am certainly no member of the cult of Corbyn, but when people talk of his 'tried and failed policies', at least he is offering an alternative to the current government's active and failed policies. It wasn't socialism in whatever form Corbyn is selling that brought the world to it's knees in 2008, and it isn't socialism that is seeing rampant inequality and is devastating lives up and down the UK today. 

 

I don't think that there is a huge gulf between yours and my perspectives on this, but the reality is that we are being offered the choice of only 2 shit sandwiches here. One we know to be shit because we have been force fed it pretty much continuously since Thatcher;  the other hasn't been tried in the UK since before most people were born and is known to be shit only through apocryphal anecdotes or nuanced reporting.

 

The very notion that to choose a path that doesn't emulate that which we are currently being herded along will instantly turn us into Venezuela is clearly ridiculous, yet so many people shudder at this prospect as if it will materialise on day 1 of a change of direction.

[billd766]

On 6/25/2019 at 12:23 PM, theoldgit said:

As I recall, everybody pays the standard rate and there used to be a maximum amount of earnings that you paid NI, then one Chancellor charged a rate with no upper limit at, I think, 1% initially for those earning above the maximum for the standard rate. 

I suspect over the years that higher rate has increased, though those affected still pay the standard rate of the first part of their earnings.

 

I just Googled it out of curiosity here. 

 

https://www.gov.uk/national-insurance/how-much-you-pay

[Basil B]

Would not be the first time his maths have been questioned.

[bristolboy]

On 6/25/2019 at 11:58 AM, dick dasterdly said:

"The IFS said each thousand-pound increase in the NI threshold would cost the government 3 billion pounds a year.

Raising the NI threshold to the 12,500 pound mark at which income tax first becomes payable would cost at least 11 billion pounds. It would remove 2.4 million low-paid workers from the levy.

 

“It is not clear that spending such sums on tax cuts is compatible with both ending austerity in public spending and prudent management of the public finances,” IFS economist Tom Waters said."

 

It's just sad the way these people are determined that the poor should bear a heavier weight than the wealthy. ☹️

Why is life expectancy faltering?

For the first time in 100 years, Britons are dying earlier. The UK now has the worst health trends in western Europe – and doctors and experts believe that the impact of austerity is a major factor

 

n a few days, a team of researchers, statisticians and geographers will gather at University College London to tackle an issue of increasing concern for doctors and health experts.

 https://www.theguardian.com/society/2019/jun/23/why-is-life-expectancy-falling

[dick dasterdly]

17 minutes ago, billd766 said:

 

I just Googled it out of curiosity here. 

 

https://www.gov.uk/national-insurance/how-much-you-pay

Thank you!

 

So it's still the case that the lower paid pay a far higher rate than the higher paid.... ☹️.

[robblok]

Tax cuts are good, but it has to be paid for one way or the other unless you expect the government to start spending less. So unless he also says where he is going to cut from to get his budget balanced its a lot of hot air and election promises. 

[bristolboy]

Well the conservatives have slashed tax rates before and lied about the consequences before they did it. So why not now?

[dick dasterdly]

5 minutes ago, robblok said:

Tax cuts are good, but it has to be paid for one way or the other unless you expect the government to start spending less. So unless he also says where he is going to cut from to get his budget balanced its a lot of hot air and election promises. 

I expect that nearly everyone agrees that "tax cuts are good", whilst not agreeing how tax income should be spent.....

 

The govt. needs to start spending less on their pensions/expenses/'friends' companies/tax breaks for the wealthy/lower NI rate for the wealthy etc. etc. - and there should be a genuine discussion as to how tax money is spent.

 

Of course this will never happen.....

[dick dasterdly]

.

Edited June 26, 2019 by dick dasterdly

[Chomper Higgot]

27 minutes ago, dick dasterdly said:

Thank you!

 

So it's still the case that the lower paid pay a far higher rate than the higher paid.... ☹️.

As with VAT, Income Tax, Bank Charges, Energy Costs, Housing Costs, Food Costs.

 

 

[theoldgit]

2 hours ago, dick dasterdly said:

So it's still the case that the lower paid pay a far higher rate than the higher paid.... ☹️.

No, that’s never been the case, everybody pays 12% on the first £962 of their weekly salary, those earning in excess of £962 a week pay a further 2% on earnings over that figure.

[RuamRudy]

I don't know the answer to our country's economic problems, but when poverty is on the rise my sympathies do not lie with the hard pressed top earners.

 

Number of children in absolute poverty across UK hits 3.7 million after increases of 200,000 in a year

"The number of children living in absolute poverty across the UK has increased by 200,000 in a year – to a total of 3.7 million.

New government data shows that while the rate of absolute child poverty had been gradually falling since 2012, it is now rising again."

[bristolboy]

34 minutes ago, theoldgit said:

No, that’s never been the case, everybody pays 12% on the first £962 of their weekly salary, those earning in excess of £962 a week pay a further 2% on earnings over that figure.

So, correct me if I'm wrong, but the more that someone earns over the limit, the lower the percentage paid on total income. Or am I missing something?

[Chomper Higgot]

3 hours ago, dick dasterdly said:

I expect that nearly everyone agrees that "tax cuts are good", whilst not agreeing how tax income should be spent.....

 

The govt. needs to start spending less on their pensions/expenses/'friends' companies/tax breaks for the wealthy/lower NI rate for the wealthy etc. etc. - and there should be a genuine discussion as to how tax money is spent.

 

Of course this will never happen.....

You seemed to have missed what the Labour Party have been saying about taxation and how it should be spent. 

[Chomper Higgot]

3 minutes ago, bristolboy said:

So, correct me if I'm wrong, but the more that someone earns over the limit, the lower the percentage paid on total income. Or am I missing something?

It's a little more complicated that that (and not good news for the sharing of the NI burden).

 

Many employers offer their employees the 'opportunity' to pay into their company pension by means of 'salary sacrifice'. 

 

This reduces the 'on paper' top line salary of the employee and thereby reduces taxes and NI due by the employee, it also dramatically reduces the NI contributions of the employee, which of course is the whole point of the 'opportunity'.

 

For higher earners the savings to both employee and employer can be considerable, the savings for lower income employees are insignificant, even if they can somehow forgo a sizeable chance of their income (most cannot).

 

I'm rather pleased to be able to say I turned down this offer when it was made to me.

 

There's such a thing as being willing to pay one's fair share. 

 

 

 

[theoldgit]

23 minutes ago, bristolboy said:

So, correct me if I'm wrong, but the more that someone earns over the limit, the lower the percentage paid on total income. Or am I missing something?

Yes, you could put that slant on it, but the fact remains that higher end earners pay more overall, and there is no cap on how much they pay.

 

[bristolboy]

10 minutes ago, theoldgit said:

Yes, you could put that slant on it, but the fact remains that higher end earners pay more overall, and there is no cap on how much they pay.

 

I wouldn't be at all surprised if the Tories apply that kind of reasoning to the income tax as well.