My last post may have come across as a little critical of Team Truss's fiscal plans, so as a believer in criticism being constructive, and in the interests of balance and fair play, here's some alternative suggestions. These are based around managing what we have, living within our means, and not endlessly trying to borrow our way out of trouble - which tends to end badly far too often.
Hold on! Isn't the way we used to live before credit became too readily available? It never did my parents or grandparents any harm. They may not have had huge numbers of luxury items, but neither did they have personal bankruptcy, IVA's, debt management plans, and sleepless nights wondering how they could ever pay their debts and get straight again.
Anyway, here goes:
- Stop fraudulent benefit claims by incentivising people to report offenders.
Firstly I have to say I have no issue with benefits being paid to people who genuinely need them. What needs stopping is people claiming when not entitled. This money could be put to better use in a number of areas, such as healthcare, public services, or supporting the taxpayer by reducing government debt.
How many people know someone who is claiming when they could work, claiming and working, claiming single parent household support when they have a wage earner living with them, etc. Yes it can be hard for the benefits agency to find them all, but offer a £500 tax free payment for information leading to a successful prosecution and they'll have plenty of leads and soon be able to make a significant dent in benefit payments, to the benefit of the majority.
Similar to the above. Anyone working 'cash in hand' is potentially guilty of tax evasion and may be prosecuted and outstanding tax collected. £500 offered for information leading to prosecutions for evaders and those supporting them should soon have money rolling in to the coffers without penalising working taxpayers.
- MP pay rises to mirror public services
Let's end the nonsense of MP's voting in their own pay rise. It won't add a lot to the purse, but clamping down on their expenses, second home allowances, etc as well will sweeten the pot.
Leave corporation tax at the current level for most businesses, but introduce tiers in a similar way to income tax, so that higher earners pay more into the pot. At a higher level of 25% this would still be competitive with other countries, and at the lower level smaller businesses would be supported.
- Leave the top rate of tax unchanged
This only affects income over £150,000 a year so why give away tax revenue when those affected are the ones who notice it least. They're already benefitting from the basic rate reduction in the same way as the rest of us.
- Stamp Duty threshold £250,000 for everyone
Raising the threshold to £425,000 for first time buyers is again benefitting the rich who can afford it. I work with a number of young people who have bought for the first time since the covid pandemic, and normal earners can't afford first properties much above £250,000 so let's again take revenue from those who are privileged enough to afford it, as we do now.
- Windfall tax on oil and gas companies
This has been proposed repeatedly, and makes sense. Companies could reduce their liability by cutting prices which would benefit us all, or keep making the same profits and help fund the price cap, thereby lowering government borrowing.
- Raise the Money Purchase Annual Allowance
Not immediately obvious, but stick with it.
Most people can access their personal pensions from age 55, and continue working if they wish. Taking the 25% tax free cash doesn't affect anything, but once you take a taxable sum the amount you can pay into a pension before getting a tax charge drops from £40,000 to £4,000.
Most of us won't get near paying the maximum, but many are over the minimum so would be affected. This was brought in to stop people recycling pension money for the tax relief, although as this would only be done by people with specialised knowledge - or high earners with financial advisers - it's potentially penalising ordinary working people saving for retirement in the last few years of their working lives. Financial advisers will suggest alternative investment strategies for their clients to continue maximising retirement savings, but the majority can't afford this route.
Pensions auto enrolment was introduced to get more people saving for retirement, and making them less reliant on the state pension, so by extension scrapping the money purchase annual allowance would extend the strategy of giving people more money to spend in their latter years - thereby increasing tax revenues.
A - possibly unintended - consequence of the mini budget is that the pound is continuing to fall in value against other major currencies, meaning that holidays abroad will be getting dearer. For those that can still afford to have a holiday break, staycations will help swell the government coffers, as will the influx of foreign tourists as Britain becomes a cheap holiday destination. The wealthy will, of course, still be able to holiday abroad.
The measures above aren't a silver bullet to fix the economy overnight - there isn't one - but are just meant to suggest there may be alternatives to uncapped borrowing and just increasing the wealth of the already rich. Somebody better positioned and qualified than me please investigate alternatives before we all end up 'Trussed-Up' in massive debt.
Finally, I caught part of an advert on the radio yesterday, hearing the bit that said something like 'you may be able to write off up to 80% of your unsecured debt'. If anyone else heard it can you plus pass the details to Liz and Kwasi for future reference.
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