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Tories To Abolish Tax On Savings...2001

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http://news.bbc.co.uk/1/hi/uk_politics/1154041.stm

The next Conservative government would abolish tax on all savings except at the upper rate, shadow chancellor Michael Portillo has announced.

In what he said was "the most radical changes to the taxation of savings for a generation", Mr Portillo said only those earning above £32,000 a year would have to continue to pay the tax.

They have failed to identify savings which can pay for these or any other tax cuts

Labour spokesman

"Today we are proposing to abolish tax on savings altogether, except at the upper rate," he said at a news conference at the party's Westminster headquarters.

"Under the next Conservative government, nobody will pay any tax on the interest they've earned from their savings unless they have an income above £32,000 a year."

Conservative leader William Hague, who joined Mr Portillo to unveil the plans on Monday, attacked the government's record on tax as having discouraged saving.

He said that proposed Tory tax reductions would be designed to encourage "individual independence, institutional freedom and social responsibility".

'Radically different'

"We want Britain to be a responsible society," said Mr Hague.

Re-elect Labour and soon any rational person will think twice before saving for the future

William Hague

"A society where people and institutions see it as worthwhile to save.

"A society where people's first instinct is to prepare for the future so that they can provide for themselves and those who depend on them.

"A society where everyone can afford to save today so that they can live in dignity tomorrow."

The Tory vision for Britain was "radically different" from the one under Chancellor Gordon Brown, whom Mr Hague accused of undermining people's "financial independence".

"Re-elect Labour and soon any rational person will think twice before saving for the future, because soon only the very rich will be able to escape from clutches of means testing," he said.

'No accident'

As a nation the UK now put aside the same proportion of its wealth as people did 40 years ago, he said.

"This is no accident when you consider the way the chancellor has treated savers," the Tory leader said.

Mr Portillo has described the plans for pensioners' savings as "only a small part of a rather bigger announcement".

He has said the package - widely expected to form part of the next Tory manifesto - will encourage a "savings culture".

'Sums don't add up

The plans were dismissed by a Labour Party spokesman who said: "No one will believe anything the Tories say about tax because none of their sums add up.

Everyone knows you can't get something for nothing - except for Michael Portillo and William Hague

Matthew Taylor

"They have failed to identify savings which can pay for these or any other tax cuts.

"The truth is that the Tories' plan would mean £16bn cuts in public services like schools, hospitals and transport."

'Phoney figures'

For the Liberal Democrats, treasury spokesman Matthew Taylor said the Conservatives were "unable to explain" just how much their tax proposals would cost.

"The Conservatives promise to match Labour pound for pound in every spending area and claim they can also cut taxes and balance the books - no-one will believe these phoney figures," he said.

"The Conservatives no sooner unveil their tax plans than they unravel. Tory tax plans just don't add up.

"Everyone knows you can't get something for nothing - except for Michael Portillo and William Hague."

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The Liebour party hadn't yet bankrupted us in 2001 incase you didn't know.

If all tax cuts are good and promote economic activity, then the proposals are suitable no matter what has happened, no?

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2001???

They lied about it more recently than that:

http://www.guardian.co.uk/politics/video/2009/jan/05/david-cameron-tax

Virtuous savers and pensioners have suffered most under Labour

Savers and pensioners are the forgotten victims of Labour's recession.

Over the past year, someone with £10,000 of savings in an easy access high street account has seen their income fall from £50 a month to less than £25. Having planned for their retirement and put money aside for a rainy day, pensioners and savers are seeing their living standards fall. Those who weren't caught up in Gordon Brown's Age of Irresponsibility are being made to pay the price for it.

Of course, cuts in interest rates by the Bank of England are absolutely necessary to try to restimulate the economy. That is why we called for them. But the unavoidable collateral damage on savers is devastating and it's simply not good enough for the Government to walk on by.

With the US Federal Reserve having reduced its interest rate to zero per cent, we may well see further rate cuts here. This would make life even more difficult for savers.

In circumstances like these, the Government should be there to help. But instead, Gordon Brown has made things worse.

First, he has systematically undermined Britain's savings culture over 10 years. In 1997, he made the calamitous decision to abolish tax relief on dividends paid to pension funds.

According to a report by a fellow of the Institute of Actuaries, this tax raid has slashed the value of private sector pensions by £175 billion. The number of members of private sector pension schemes has fallen from 6.1 million in 1995 to 3.6 million last year, while the savings ratio has more than halved.

Second, there are things Gordon Brown could be doing now to protect savers from further losses. He could suspend the requirement to annuitise accrued pensions at the age of 75. Labour's refusal to do so means that anyone turning 75 in the near future will receive a terrible deal when they are forced to buy an annuity, consigning them to a lower income for the rest of their life. This simply isn't fair. It's also unfair that Gordon Brown still hasn't dealt with the Equitable Life scandal. The Parliamentary Ombudsman found the Government at fault, and the Prime Minister promised that he would respond by Christmas – but is now refusing to take action. That's a disgrace, and won't restore confidence in our savings and pensions system. Third, with Labour's national debt forecast to double to a trillion pounds over the next five years, higher tax rises are inevitable.

While the Prime Minister may have forgotten about savers, the Conservatives have not. We would suspend the annuity rule. We would accept the Ombudsman's report on Equitable Life. We would increase the threshold for inheritance tax, so that the vast majority of responsible families who save for their children will be exempt from estate duty. And we would avoid adding recklessly to the national debt and constrain the growth of government spending.

However, we also want to help savers on more modest incomes, and take steps to encourage saving and reward financial responsibility. We are looking at the tax system to see what can be done. Our general election manifesto will include policies to help savers and pensioners, as part of our plan to deliver economic change for Britain.

George Osborne is the shadow chancellor

http://www.telegraph.co.uk/comment/personal-view/3835309/Virtuous-savers-and-pensioners-have-suffered-most-under-Labour.html

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If all tax cuts are good and promote economic activity, then the proposals are suitable no matter what has happened, no?

Yes providing we cut the non-productive elements of the state at the same time (around 50% of the current state), then taxes can and should come down.

The problem is we have to balance the books, even if one side of the books is not required and non productive, something the idiots at Labour had no clue about.

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The governments own savings bank NS&I pay some of the worst interest rates about...investment account :lol: paying 0.2% gross.....is that what they think of their savers.

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Pre-election they wanted an economy built on savings and investment not Labour debt. No tax on savings etc.

Post-election they don't remove the tax, they scrap Index Linked Certificates, every time Osborne opens his mouth he wants "interest rates lower for longer", now we have Shapps making councils to act as guarantors for FTBs

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I think every person should have a tax free asset of their choice.

Its unfair homeowners get a tax free store of wealth while non homeowners do not. Insane that i can make any profit on a house so long as its my prime residence, and yet if i rent and have a bit more savings than the ISA limit or am a taxpayer i pay 20 or 40% on even the smallest bit of interest.

However, people only bother putting money in houses, stocks, because of tax advantages.

They need to punish savers to fuel the ponzi.

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LOL

Never beleive anything any of them say.

Remember in 1988 when the tories started meddling with and cutting the married mans tax allowance , they said they were going to let non working partners who stayed at home to look after children transfer unused tax allowance to working partner. Well they let married mans tax allowance dwindle which enabled GB to scrap it altogether the transferable allowance thing never happened. When they said higher rate tax payers would lose family allowance they also murmered about transfering unused tax allowances again for non working partners . Don't hold your breath.

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And.... if they combine Income Tax with NIC and apply it to savings interest income that will be dreadful for savers.

Yeh, but why should someone who's lucky enough to have cash in the bank be taxed more lightly than someone who has to go out and earn it?

Andy

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Before the May 2010 election didn't they "promise" it because so many older people (no not boomers aaargh) relied on their savings to live and were being destroyed by the BoE (now discredited) and its NIRP (Nero Interest Rate Policy) - and they wanted their votes.

That was nearly a year ago but who knows there's still time for them to keep that "promise".

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Yeh, but why should someone who's lucky enough to have cash in the bank be taxed more lightly than someone who has to go out and earn it?

Andy

Is it because the people who are "lucky" enough to have savings have already been out and earned it and paid tax on it?

Do you think pixies put the money in my bank account during the night?

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Yeh, but why should someone who's lucky enough to have cash in the bank be taxed more lightly than someone who has to go out and earn it?

Andy

Because he's already paid tax and NI when he earned it to be able to put it into the bank? Why should he have to pay tax and NI again, when in reality the government have already taxed his savings by meagre interest rates below inflation?

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