Thursday, July 14, 2011
Affordability reduced in coming years
Taxes to rise by 12p to repay Britain's debt... and we'll be suffering for 50 years
"Taxes may have to go up by as much as 12p in the pound for the next 50 years simply to keep Britain from going bust, an independent watchdog warned yesterday. The burden of extra levies will fall upon the public for half a century to cope with the aftermath of the credit crunch and the impact of our ageing population".
Posted by alan @ 03:19 AM (2298 views)
27 thoughts on “Affordability reduced in coming years”
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ralph musgrave says:
You don’t seriously expect to see anything intelligent in the Daily Mail on the subject of the national debt do you? The subject is way above their pretty little heads.
The main weakness in their article is that they fail to distinguish between two factors. First there is the tax increasing effects of an ageing population, which are serious and easily worked out. Moreover, such tax increases unquestionably reduce living standards for those paying such taxes.
Second (and there is a big contrast here) there is the tax increasing effect of paying off the national debt. This is VERY VERY elusive and hard to work out. Also, curious as this may sound, it is hard to say by how much any tax increase would depress living standards.
For those interested in further details, Google the phrase “Fast fiscal consolidation would not hinder the recovery or involve austerityâ€. But be warned: you need an attention span of at least five minutes.
khards says:
I think that the working age population in the country as already hit peak tax. Hiking ‘income’ tax rates will be counter productive because it will deter more people from working and paying tax in general, think cash in hand.
VAT to 25% would be better than raising income tax. There is no escaping VAT and it would not hit the ‘very poor’ so hard because there is no/lower VAT on food, books etc..
peter says:
I’d say it was time that government spending fell.
Not taxes went up.
orcusmaximus says:
If the problem is an aging population, then the unpaletable soution is to raise the retirement age!
And reduce public sector pensions to match private sector pensions of course.
khards says:
Stealth tax Increase on pensions then you do not have to cut pensions.
uncle tom says:
The problem with long term projections is that they rely on so many factors that cannot be prophesised with any degree of accuracy.
..somewhere I have a book that was a very serious and well researched prediction of the future, published in the early 1960’s
– It was conspicuously wrong before that decade was out, and makes quite entertaining reading today..
mark says:
why not add vat to non vatable items now such as coffee and certain foods???? failing that just increase it to 70% and kill the UK off
uncle tom says:
mark,
Why not take a close look at the incredible sums now spent on public procurement exercises, and find out where the money is really going..
khards says:
Why stop at 70%?
300% VAT on the following goods:
Holidays
Slippers
TCP
Bath salts
Pipes and flavoured tobacco
Cough candy,
Hair curlers,
TV license
Nissan Micra’s
You get the idea..
mark says:
we could just copy logans run, when you hit 60 excluding me lol
mark wadsworth says:
Khards, VAT is The Worst Tax by a million miles.
Uncle Tom: “mark, Why not take a close look at the incredible sums now spent on public procurement exercises…” That is what puzzles me – HM Treasury readily admits that about forty per cent of government spending is on this nonsense, the bill is a third larger than the entire salaries and pensions of seven or eight million public sector workers (and heaven knows we spend too much on that). We can track down a few billion year or there for sub-contracted stuff like refuse collection or school dinners and the occasional air craft carrier, but that explains less than ten per cent of it. I suspect that it’s straightforward theft and corruption but nobody really knows.
mark wadsworth says:
Ralph, your article seems plausible enough, but you make a fatal error here:
“some of the money for the debt buy back could come from the printing press (as is the case with QE).”
As we know full well, the UK version of QE was nothing of the sort – all that happens is that the govt swapped long term debts (bonds) for short term debt (balances with BoE). The amount of “money” which the banks have avaliable barely changed (they merely made a handsome mark up on transaction costs.
And as you yourself explain in that article, ultimately, all govt debt is fungible – there’s no ultimate real difference between bank notes, balances with BoE, unpaid creditors, future pension promises, govt bonds etc, it’s all a question of fact and degree. So if the BoE has £1 million printed in fresh new notes and buys back £1million of govt bonds, all that happens is that one department of HM treasury reduces the debts it owes by £1 million and another department (BoE) increases its liabilities by £1 milllion (notes in circulation are just liabilities from the BoE point of view – clearly they are financial assets if you have them in your wallet but as we well know, for every financial asset there must be a financial liability).
uncle tom says:
“and the occasional air craft carrier”
The basic raw materials needed to make an aircraft carrier come to about £20M – which is only about 0.5% of the quoted cost of building one. A ton of ship, weighing about the same as a family car, and for the most part far less complicated, now comes in at around £200k.
– How the hell can it be so expensive??
uncle tom says:
(weight for weight, aircraft carriers are more expensive than luxury yachts..)
mark wadsworth says:
UT, the Ministry of Defence (or is it Department of..?) are reknowned for wild overspend (or corruption or incompetence, take your pick) but at least we know what an aircraft carrier is, it’s £20 billion worth of fancy stuff that we can see and boosts national morale and so on, and we only buy one every ten years (or whatever).
But in 2009-10, out of total govt spending £700 billion-ish, £280 billion-ish was paid to private sector. Where the heck does it all go? We could buy fourteen wildly overpriced aircraft carriers every year for that sort of money.
timmy t says:
You only need to look at the raft of public sector tender websites to see how much money is wasted. Literally millions are spent on feasibility studies for the most ludicrous things. I would list some, but anyone unfamiliar with such sites would assume I was making them up.
mark says:
MW
How much is spent on the lazy a^^ benefits people?
How much is given to other countries?
How much is siphoned off into private jets, yachts, properties, etc
I would like to know how many properties current and ex MPs , their partners, children and cleaners own and the total value
mark wadsworth says:
Mark, you can look this up for yourself, but from memory:
Unemployment benefit and tax credits etc = about £50 billion
Old age pensions, pensions credit blah blah = £100 billion
Public sector salaries and pensions £170 billion
Sub-contracted stuff like refuse collection, school dinners, some prisons = £10 billion
Corporatist spending £270 billion
Plus £50 billion for interest payments plus other bits and pieces – EU payments and foreign aid (more corruption etc) is about £20 billion,
icarus says:
UT @13 – some answers at http://www.economist.com/node/16886851
Start reading under the heading “instead of Strategy”
mr g says:
Thanks a lot Gordon.
letthemfall says:
“And reduce public sector pensions to match private sector pensions of course.”
Or raise private to match public. Unless penury for all is your preferred option.
letthemfall says:
UT”- How the hell can it be so expensive??”
Err, they are very big and complicated and take a long time to build?
MW:”, the Ministry of Defence (or is it Department of..?) are reknowned for wild overspend (or corruption or incompetence, take your pick)”
Is that of the civil servants or the private contractors that build the things?
mark wadsworth says:
LTF, it’s the civil servants, you can’t blame the ship builders for helping themselves once the idiot civil service open the taxpayer’s wallet and promise to close their eyes and count to a hundred.
letthemfall says:
MW Presumably you don’t mind someone helping themselves to your wallet if it falls out of your pocket one day. Funny how the fleeced gets the blame instead of the fleecer.
mark wadsworth says:
LTF, I would be and highly miffed by all of this, but it appears that most people just don’t care about £280 billion a year being p*ssed up the wall, they’d much rather get themselves all a-lather over £10 billion unemployment benefit of £15 billion for the EU. Let’s worry about the BIG NUMBERS first and then deal with the little ones.
letthemfall says:
MW, That’s the sensible approach, although the fuss over benefits pretty much stems from the tabloids I think. But while I’m happy to level blame at the public sector where it’s due, equally I want to hold the private to account too.
mark wadsworth says:
LTF, agreed – but as I said above, it’s “the public sector” (i.e. politicians and civil servants) who made the bold decision to give their friends and families £280 billion’s worth of contracts every year. It’s not so much “holding the private sector to accoun” it’s about turning off the tap (and, if we can’t wriggle out of the contracts, then inventing some new taxes that claw back all the profits from PFI and so on).