Hidden Income tax increase

[JohnD]

Thanks to Fiscal Drag, where tax allowances have been frozen while inflation marches on, more people have to pay income tax, and others have been moved into higher bands, even though, in real terms, their income has stayed the same or even reduced.

Amazingly, this has gone almost unmentioned, and many taxpayers are not even aware of it.

This brings in many billions of extra tax receipts, some of which can be dribbled out to buy votes or give extra benefits to the rich. For example people who already have a pension fund exceeding a million and want to shield still more.


In England in 2019, the Personal Tax Allowance was £12,500. In 2021 it went up to £12,570.

It is still £12,570 and the government says it will stay there until (at least?) 2026.

 

[ETAF]

yep, and a lot of discussion when the freeze was made .....
Stealth TAX , while rich get a nice little gift , not paying tax when they receive income on huge pension pots .......... as per the other thread ....

see what discussions occur over the next few days , when i think its discussed for 4 days , before becoming law

 

[Justin Passing]

Amazingly, this has gone almost unmentioned, and many taxpayers are not even aware of it.

It has been widely commented on for years, and particularly since Rishi came in under Boris.

In that context this was published Telegraph 8/22

Your perspective on life is idiopathic.

 

[JohnD]

It has been widely commented on for years, and particularly since Rishi came in under Boris.

In that context this was published Telegraph 8/22


Your perspective on life is idiopathic.

The fact that more prosperous people have gained while the rest of us have lost, is a separate matter. I have always said that is nicer to earn lots of money, and pay some tax on it, than the reverse. Your graph does not show indexing of the personal allowance so is irrelevant.

The Personal Allowance is generally increased to prevent the ill effects I describe. The recent freezing is untypical and bears heavily on the less well off. Over the last ten years, average earnings have fallen below inflation, so not only are they poorer in real terms, but they are paying more tax.

This is pernicious and deliberate government policy.

 

[JohnD]

See also

"

UK real household disposable income to fall at fastest pace since 1950s​

Valentina Romei

UK real household disposable income is set to fall at its fastest pace since the 1950s despite a brightening economic outlook.
The Office for Budget Responsibility, the UK fiscal watchdog, on Wednesday said that real household disposable income per person — a measure of living standards — was expected to fall by a cumulative 5.7 per cent over the two financial years 2022-23 and 2023-24.
This would mark the largest two-year fall since records began in 1956-57.
The figure mainly reflects the fact that inflation is above nominal wage growth. It means that real living standards are 0.4 per cent lower than their pre-pandemic levels in 2027-28. "

And

UK tax burden to reach highest level since second world war, says OBR​

Valentina Romei

The UK tax burden is to reach the highest level since the second world war, according to the Office for Budget Responsibility, the UK fiscal watchdog.
The OBR forecast that the tax burden — the ratio of taxes to GDP — will reach a post-war high of 37.7 per cent of GDP in 2027-28. That includes the highest ratio of corporation tax receipts to GDP since the levy was introduced in 1965.
The OBR also expects the ratio of public spending to GDP to settle at 43.4 per cent, its highest sustained level since the 1970s."

Source: FT.com

 

[JohnD]

Update

Now frozen to (at least) 2028.

Being described as "stealth tax increase"

 

[Justin Passing]

It's not irrelevant, it's a consequence - you could try to understand. It's your post #5 which is off topic. The above was more interesting that what you seem to think is something newly described, but isn't. Fiscal drag has been all over the papers in the last few years. The graph is what you get as result of freezing the boundaries, which the article went on from.
We all know about what you think is new.

A commentator on a particularly notorious exponent, Gordon Brown under Tony Blair’s New Labour, described him as one guilty of “leaning on those further down the income scale”, while leaving “almost untouched” the “huge fortunes of those at the very top” – citing cuts to corporation tax, while using fiscal drag to bring more lower paid people into higher tax bands by leaving thresholds unchanged.

I remember it was called stealth tax under Rishi too, https://www.theguardian.com/politic...ed-of-imposing-21bn-stealth-tax-on-uk-workers. And probably before.

Nothing much new in the world, lad. Best to check first or you look a dik if you've "cliamed" it then got all thick and stroppy when someone expands on it.

 

[JohnD]

We all know about what you think is new.

I'm very pleased that you agree that working people are paying more tax, although they are getting poorer, and that this is deliberate government policy.

I'm not convinced you are right, though, in believing that "everybody knows."

It remains my belief, as I said earlier, that "many taxpayers are not even aware of it."

It will increase taxation by £29.3bn a year.

 

[motorbiking]

There was a comment after the budget that we are paying the highest taxes since ww2. I say "we". It's mostly those in the top 50%ile that have picked up the bill. I would like to see some evidence that there is a deliberate government policy to make working people poorer. I suspect its political bias or outright fibs.

It's very difficult to argue that the rich have got off lightly when you look at the changes to the upper income tax regime. Top rate threshold reduced, more people paying top rate tax, the better off are paying a larger portion of the bill.

Summary Statistics

www.gov.uk

 

[Justin Passing]

I'm not convinced you are right, though, in believing that "everybody knows."

WOrking people need to pay more tax. Yawn. Agree with you? Who the fk do you think you are?
Politicians tell us. From both sides. Hunt was on the box last night, it's been in the papers for a while, etc etc. Articles have gone back years, people know what tax thresholds are. Yes, taxes are up, its not hidden or a conspiracy, is it.

 

[JohnD]

... a deliberate government policy to make working people poorer....

If you can find someone who makes that claim, I suppose you could ask them.

I would have thought incompetence, not caring, and a result of other policies, contribute more.

But you will agree that working people are paying more tax, and that this is government policy, and it is happening even though in real terms they are getting poorer.

 

[motorbiking]

If you can find someone who makes that claim, I suppose you could ask them.

I'm very pleased that you agree that working people are paying more tax, although they are getting poorer, and that this is deliberate government policy.

But you will agree that working people are paying more tax, and that this is government policy, and it is happening even though in real terms they are getting poorer.

Working people are not getting poorer as a result of government policy. Do you think people in other countries do not have an inflation crisis fuelled by a war in Ukraine, post covid recovery, disruptive tactics by those attacking the west and general economic headwinds?

 

[JohnD]

Working people are not getting poorer as a result of government policy.

As I said, working people are paying more tax as a result of deliberate government policy.

And this is happening even though they are getting poorer in real terms.

It's interesting that you repeatedly distort my words. In recognition of your inability to disprove them.

 

[Mottie]

It's interesting that you repeatedly distort my words. In recognition of your inability to disprove them.

And of course, that’s something you'd never do.

 

[JohnD]

Thank you.