Which taxes should Burnham put up?

[Toohotforwork]

It seems pretty clear that in the Autumn we are in for another massive tax rising budget. Starmer has done of the ground work to show what we need to spend and how there isn't any money, I'm sure the "blackholes" were co-ordinated with the new team for messaging. Labour don't have it in them to cut the welfare bill and to be fair the Tories didn't either - so I can't see that changing.

Which taxes would up increase to fund the country properly?

Personally I'd go the easy route and put 1 or 2p on the basic rate of income tax. It would break the manifesto but one short sharp initiative has got to be better than death by a thousand small increases.

I think the care proposals of getting rid of inheritance tax and replacing it with a 10% charge on everyone is very sensible.

Equalising income tax and capital gains tax seems an easy win as well.

Taxis , equipment, extra heating, carers, therapy, physio.

Food medication therapies extra washing adaptable clothing adaptations in the home wheelchair repairs we had to buy one of those push button water boilers rather than a kettle pads because you can get some for free on the NHS but they arnt unlimited so you need to buy your own

"...leave it to his kids without inheritance tax rules applying."
This is not literally true.
The reality is more nuanced.
The strategy works because:

• parents can freeze the current value of their estate;
• future investment growth accrues to shares already owned by children (or trusts);
• therefore that future appreciation may never enter the parents' taxable estate.

That is very different from "avoiding inheritance tax." If structured correctly:

• the original wealth may still be within the founder's estate;
• the future increase in value belongs elsewhere.

Professionals often describe FICs as IHT freezing vehicles, not complete IHT avoidance vehicles.

A Family Investment Company is best viewed as a long-term estate and wealth management vehicle, not a quick tax-saving scheme. It tends to be worthwhile only where there is substantial wealth, a long investment horizon, and a desire to pass assets to future generations while retaining control.

Also adaptations to a car. Extra costs associated with normal activities that able-bodied people take for granted. For example most people with a garden take it for granted they can maintain and use it. Not so for a disabled person. They may need adaptations and a gardener.

The list is endless, really.

Good thing only the super rich will be affected...

Well you clearly have never run a restaurant! Profit margins are low. More if the owner is also the chef, but once you are employing staff, the margins are really tight. Businesss like this can provide an income for multiple people but with low VAT thresholds theres no incentive to grow and thrive. This means fewer jobs and less growth.
If you make it so only huge chains can be viable, there goes our high street independent shops, cafes and restaurants. Is that the goal? I hope not.

thats the thing it soon will be just the big chains if not already, the traditional high street model is outdated overall

I also think politicians should stop this tendency to act like certain problems don’t exist, even when they are really expensive. E.g. covid (not lockdowns, which is a different problem). Long covid is estimated to cost £12bn a year now, which will obviously only increase with every round. There are lots of examples where subjects seem taboo and issues are pushed further and further into the future to deal with at a much higher cost.

It feels like the country is held up with sellotape and will take a long time to start to fix. In the meantime, people are getting squeezed more and more, the most vulnerable are getting demonised, misinformation is high and goodness knows what the answer is.

the whole economy is all financed by debt because if it was based on true value of what society could afford society would grow alot slower overall and progress would be slower etc

Britain’s main disability benefit is “not fit for purpose” and deters people from taking up work, a government review has found.

A report by Sir Stephen Timms, the social security minister, said Personal Independence Payments (PIP) were not working “as intended”.

It warned the spiralling cost of the handouts, set to hit £41bn at the end of the decade, was causing public support for the welfare state to crumble, but did not propose ways to find savings.

I think, apropos of the comment I made yesterday about Slovakia's approach to reducing the cost of benefits, that the idea of a ceiling of 95% of whatever index measure chosen (average wage growth, RPI/CPI or a fixed percentage) applied to all routine benefit uplifts would limit the rate of burden increase without claimants being able to scream about unfairness.

Actually Government debt acts as a brake on economic growth. Previous Governments (Conservative and Labour) increased Government debt, especially since 1997, to increase spending because it's a lot more electorally popular than increasing taxation. And besides if you are only in power for 5 year terms who cares if increasing debt creates a burden for future generations!

Unfortunately (as Liz Truss found out the hard way) significant debt increases are no longer an option.

The interest on the existing debt is now more than the entire education budget, meaning that the Government has to either increase debt or raise taxation just to pay the growing interest bill. Meaning less money is available for value adding parts of the economy such as education.

"Britain's main disability benefit is 'not fit for purpose' and deters people from taking up work, a government review has found."

The irony is that the party responsible for creating the modern welfare state now seems determined to tax it into oblivion to pay for a ballooning welfare bill.

"The plan for Social Security is put forward as part of a comprehensive policy of social progress. The State in organising security should not stifle incentive, opportunity or responsibility. In establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family."

William Beveridge, the architect of the modern welfare state

Seems to me that Labour have decided welfare should be a lifestyle and that renting from a corporate landlord or the state and £39k is the "more" that people who don't want to be on welfare should accept. Anyone who wants more than this is selfish and tax is the tool that will remind them to know their place. Large corporates and super rich meanwhile can continue their power and money grab unchallenged,

Reducing the VAT threshold will do untold damage to the economy as lots of small businesses will become unviable overnight. If it were £40k, what about the business currently doing £45k of turnover - they'd be out of pocket so would do the same at those at £90k and cut down their working to get back under £40k - or more likely just give up altogether.

But it is a Labour government of hate, spite and envy, so I wouldn't be surprised if they did it!

Yes, other EU countries have much lower VAT registration thresholds, but they were set up like that decades ago generally, so no one knows any difference and businesses have been set up for decades on that basis. It's not something you can retro-implement.

These arbitrary thresholds are very damaging as they put the brake on growth and a reduction would put growth into reverse.

In fact, if anything, I'd go for a zero threshold, and make every single business register for VAT from their first £1 of turnover. Then at least you'd have a level playing field, no competition from smaller non vat registered businesses, and more importantly no barriers to growth.

But there's also have to be a proper clampdown on the black economy as any reduction of VAT threshold (or a zero threshold) would massively fuel undeclared cash in hand sales, artificial business splitting, etc., which HMRC is currently incapable of tackling despite it already costing tens of billions each year and the largest component of the official tax gap.

Yes this thread mirrors Labour - every meeting is how can we tax more.

‘Every meeting I have is “who can we tax in order to pay benefits to others”.

I don’t think they can switch from this ethos but at some point they’ll be out due to it.

This.
Surely no reasonable person can object to some benefits being means tested provided the threshold is set at a reasonable level. And means should include assets.
Yes increase CGT to basic rate and index link the threshold.
And revert the pension triple lock to a double lock (uprating by the higher of earnings or CPI). And I speak as a new retiree.

The thing with CGT is that it is a lower rate to acknowledge that there's no longer any form of accounting for general inflation over the time you own the asset. Go back 2/3/4 decades and you had indexation allowance which reflected the time that you held the asset, which was then scrapped and replaced with taper relief, which was a yearly reduction, again to reflect the time you owned the asset. That was then scrapped and CGT rates reduced instead. I'd be all for reverting CGT rates back to higher levels, but you do need some kind of adjustment for length of time you've owned it. It's clearly wrong when someone who has owned an asset for a year pays the same CGT as someone who's owned an asset for 50 years, if the "basic" simple gain in the same. There has to be some kind of time apportionment of the gain.