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Income Tax Revenue Could Be Lower Than Expected, Finance Watchdog Says

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http://www.theguardian.com/money/2014/oct/13/income-tax-revenue-lower-than-expected-office-budget-responsibility

Income tax revenues in the UK are likely to be lower than expected despite rising numbers of people in work, the official public finances watchdog has warned.

Robert Chote, the head of the Office for Budget Responsibility, said the expected shortfall was due to the numbers going into relatively low-paid work.

“From the perspective of the public finances, that’s not particularly good news,” he told the BBC Radio 4 Today programme.

“The chancellor of the exchequer gets more bang for his buck if wages and salaries rise as a result of people’s earnings going up than if employment goes up.

“If earnings go up you are taking more people into higher income tax brackets whereas if employment is going up you are perhaps bringing in more people at the bottom.

“This continued story of earnings growing less rapidly than expected and employment growing more rapidly than expected does perhaps suggest that we’re more likely to be disappointed than to overachieve on income tax receipts this year.”

Double whammy of low paid work and then claiming tax credits? Luckily Dave has already pledged tax cuts....

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Do most people understand that the majority of people who earn over £100K are self employed and pay less than 20% corporation tax on their earnings? If you include the fact they reclaim VAT they are not really paying anywhere near employee level tax of 40%. This skews all employment data showing that average earnings are £26K. That's how people buy houses whilst the average earnings are still 26K.

Anyone who earns over £100K now who is in a knowledge based industry should look to lower their tax bill as they are charged 60%+ tax given the removal of the nil rate band. Add to that what they pay in VAT and other stealth taxes its obvious that to earn more you simply have to become self employed. And that is exactly what is happening as more people setup companies than ever before and the rates of self employed people reach record highs. What's the point of working if you give the government 70%+ of your earnings so they can use it to bribe pensioners to vote for them? Contrary to popular believe its pensions and a bit of housing benefit that are destroying us not unemployment benefit which is tiny compared to the majority of the benefits bill. The productive part of society is being sold down the river in order to give older un-productive members of society pensions that they were promised but were clearly unsustainable.

The shite will hit the fan in a few years...and those with energy and little to do will always be the ones who revolt...that is what history teaches us.

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I will pay negative income tax this year.

If you earn £10,000 a year you don't pay any income tax. You can put £8,000 into your pension and pay negative £2,000 in tax as your pension is made up to £10,000.

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So low income tax receipts and not enough money to pay for pensions. I wonder what they will do? Surely landlords and their tax incentives must be looking ripe for the picking?

Edited by fru-gal

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So low income tax receipts and not enough money to pay for pensions. I wonder what they will do? Surely landlords and their tax incentives must be looking ripe for the picking?

The IMF is very worried about inequality* and seems, in its papers, to be quite keen on property taxes as one of a number of solutions.

So governments could take the hint, perhaps. Get rid of tax incentives - get more money in. Crack down on tax avoidance by property owners - get more money in.

*who'da thunk it, eh?

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The IMF is very worried about inequality* and seems, in its papers, to be quite keen on property taxes as one of a number of solutions.

So governments could take the hint, perhaps. Get rid of tax incentives - get more money in. Crack down on tax avoidance by property owners - get more money in.

*who'da thunk it, eh?

That and reducing the benefits bill - landlord housing benefit, employers subsidy working tax credits, all the benefits that incentivise workless families to have more children than they can afford, plus of course all the tax avoidance by big business such as Starbucks, Amazon, Google etc.

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The Evening Standard had a hilarious line in their paper edition article on this, something like 'wages have fallen during the recovery'.

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