The Labour Government

[Chippy_boy]

Nice try. But it's obviously one reason why the "tax burden" is at a record high.

It's not a "nice try". And this "tax burden" argument in this context is nonsense. Perhaps it is your reflex reaction to have to argue with a tory, but actually I was supporting the Labour position of freezing allowances, which they will certainly do.

Rough figues, someone on £40k per year pays £5,486 in tax and NI, and takes home £32,320

They get a 5% pay rise. but the tax allowances are frozen. so now they earn £40,800. They pay £5,646 in tax and NI, so yes their tax has increased of course. But they take hom £32,896. i.e. they are £576 better off.

You only pay more tax if you earn more. And if you earn more, you get to keep most of it, even if allowances are frozen. This nonsense line about "more people being dragged into high tax brackets" etc is rubbish. They are not dragged into anything. Fiscal drag is a ludicrous term.

 

[Chippy_boy]

Have the tax payers alliance ever be in favour of any tax policy?

Was the CEO privately educated?

Does he send his children to a private school?

Oh I see. Let's put VAT on school fees then. You've convinced me.

 

[Chippy_boy]

Didn't she announce yesterday that there won't be real cuts in overall spending?

Of course there won't be cuts to overall spending. Why should there be? They are going to take more tax off everyone and (probably) borrow more to fund infrastructure investment.

So with much higher receipts and probably increased borrowing as well, of course they are going to spend more. They are already spending £9bn more on public sector pay and that's only the start. Ed Silliband wasting, sorry, spending £11bn on foreign climate change nonsense. We will have 5 years now of ever increasing taxes and ever increased spending, until the system is completely broken and they get kicked out. Same as usual, only this time it's pretty broken to start with so the "kicked out" bit might well happen in 1 term not 2 or 3.

 

[Brewster's millions]

Didn't she announce yesterday that there won't be real cuts in overall spending?

They've also floated changes to the borrowing rules, with potentially some quite large increases in investment (Reports yesterday of £30bn+, although it wouldn't surprise me if they floated something big, and then went lower).

It does look like we're looking at tax increases, but again, those floated in advance appear to be wealth taxes, aimed at a smallish, well off part of society.

What gets announced may be totally different, but if spending is increased, and taxes are only increased for the wealthy, is that really austerity?

Reeves already has room to boost investment in the near-term, without any changes to the fiscal rules, because she can determine the extent to which headline borrowing- which has to roughly halve over the next five years in order to hit the overriding debt rule - is split between the current budget deficit and net investment.

In the last fiscal year, about 40% of headline borrowing related to the current budget, and the rest was investment. Therefore if she can reduce the current budget deficit faster than currently envisaged, then she can open up room for more investment. So Reeves talking about tough choices, rising investment and no real terms cuts in overall spending is all possible if she has a very strict, austere in fact, control over the current budget. Which obviously fits in with cutting the WFA and tough talk on benefits etc, as well as the spending cuts already announced.

This discussion around tweaking the fiscal rules in order to better capture the benefits of investment, and possibly place these against the rise in debt and allow for more investment, is interesting but fanciful in my view. The big issue here is how to measure these benefits, and markets will rightly be concerned by very favourable methodologies being employed which funnily enough help ensure the fiscal rules aren’t broken.

There may be some movement on this in the budget but it will be very tentative, and any big increases in investment will come from tax rises and very tight controls over other areas of expenditure, and ultimately headline borrowing will still decline. So still fiscal constraint.

Finally, you need to be very careful around this narrative around only the wealthy facing additional taxes, chiefly because it’s nonsense. No doubt some additional tax hikes will be announced and these will hit the wealthiest, but the vast majority of the increased tax revenue over the next few years will come from fiscal drag around income tax allowances, and everyone working will be paying for that.

 

[metalblue]

This argument on tyres is a bit silly. A Range Rover weighs 50% more than a Tesla Model 3 so why hasn't this argument been made for combustion cars? Why does it only apply to EV's? If it's a problem then why don't we just ban any car above 2 tons which includes most Jaguars, Range Rovers and the stupidly sized SUV's that people drive nowadays?

The air pollution problem comes down unfortunately to maths and not tyres. Combustion engines are much more efficient than they were even 10 years ago but the cumulative effect is that more cars are on the road than ever before. 75 years ago there was no car related air pollution but that's because there were no cars on the road.

The only way around this is to wholesale replace combustion engines with EV's or stop people driving altogether and move them onto public transport. The latter isn't going to happen because public transport is shite and expensive so there is only one choice until somebody figures out an alternative. On tyres alone Tesla are developing a replacement for tyres anyway, that can easily be fixed.

Hydrogen is an alternative but it isn't going to work because the fuel itself is too expensive to produce versus sustainable electricity. A hydrogen fill up today would cost around £30 for 300 miles, my Tesla costs me £2 and electricity eventually will be almost free to produce because it won't require fossil fuels. With hydrogen I'd expect the same arguments against EV's to be made whilst people bizarrely still argue in favour of choking on carbon monoxide or Co2.

I suppose the argument is if we all drive EVs then that’s 30+ million heavy cars rather than the 2-3m today it’s going to make a material difference.

As you say technology is advancing all the time. EVs are getting better. Tech to combat the existing carbon is getting better. There is no single answer but I think a collective of tech will get close to a holistic solution.

Put it this way I didn’t think, 10 years ago, we had any chance of succeeding to undo the damage done by humans, now I’m far more optimistic.

 

[Chippy_boy]

Reeves already has room to boost investment in the near-term, without any changes to the fiscal rules, because she can determine the extent to which headline borrowing- which has to roughly halve over the next five years in order to hit the overriding debt rule - is split between the current budget deficit and net investment.

In the last fiscal year, about 40% of headline borrowing related to the current budget, and the rest was investment. Therefore if she can reduce the current budget deficit faster than currently envisaged, then she can open up room for more investment. So Reeves talking about tough choices, rising investment and no real terms cuts in overall spending is all possible if she has a very strict, austere in fact, control over the current budget. Which obviously fits in with cutting the WFA and tough talk on benefits etc, as well as the spending cuts already announced.

This discussion around tweaking the fiscal rules in order to better capture the benefits of investment, and possibly place these against the rise in debt and allow for more investment, is interesting but fanciful in my view. The big issue here is how to measure these benefits, and markets will rightly be concerned by very favourable methodologies being employed which funnily enough help ensure the fiscal rules aren’t broken.

There may be some movement on this in the budget but it will be very tentative, and any big increases in investment will come from tax rises and very tight controls over other areas of expenditure, and ultimately headline borrowing will still decline. So still fiscal constraint.

Finally, you need to be very careful around this narrative around only the wealthy facing additional taxes, chiefly because it’s nonsense. No doubt some additional tax hikes will be announced and these will hit the wealthiest, but the vast majority of the increased tax revenue over the next few years will come from fiscal drag around income tax allowances, and everyone working will be paying for that.

Great analysis IMO.

 

[hilts]

They've not had a budget yet.

I know that was the point, they spout hot air until they don't. They have taken money off pensioners and given money to doctors and train drivers up to this point. They have also saved themselves some money on clothes, tickets apartment rentals etc.....

Now the sycophants may try the pedantry because politicians try to give themselves an out.

The Wfa withdrawal isn't a tax and politicians doctors and train drivers obviously work so the lackeys will use this as an argument.

Balanced people may well come to the conclusion that the oppodite so far of protecting the poor and taking from the wealthier has happened.

Let's see what the budget brings.

 

[hilts]

It's not a "nice try". And this "tax burden" argument in this context is nonsense. Perhaps it is your reflex reaction to have to argue with a tory, but actually I was supporting the Labour position of freezing allowances, which they will certainly do.

Rough figues, someone on £40k per year pays £5,486 in tax and NI, and takes home £32,320

They get a 5% pay rise. but the tax allowances are frozen. so now they earn £40,800. They pay £5,646 in tax and NI, so yes their tax has increased of course. But they take hom £32,896. i.e. they are £576 better off.

You only pay more tax if you earn more. And if you earn more, you get to keep most of it, even if allowances are frozen. This nonsense line about "more people being dragged into high tax brackets" etc is rubbish. They are not dragged into anything. Fiscal drag is a ludicrous term.

If I'm on 40k a year and get a 5% payrise and my boss gives me £800 a year I'm bringing my baseball bat into work for a quiet word with him.

Unless I've read it wrong:-)

 

[inbetween]

I suppose the argument is if we all drive EVs then that’s 30+ million heavy cars rather than the 2-3m today it’s going to make a material difference.

As you say technology is advancing all the time. EVs are getting better. Tech to combat the existing carbon is getting better. There is no single answer but I think a collective of tech will get close to a holistic solution.

Put it this way I didn’t think, 10 years ago, we had any chance of succeeding to undo the damage done by humans, now I’m far more optimistic.

I actually think the complete opposite about undoing the damage. I think it is impossible to undo it because it's only going to worsen over the next 10 years. Whatever we do in the UK will be undone by the change in the developing world which is sort of why there is an argument to invest in third world mitigations above all else.

You only have to look at the most pollutive or CO intensive areas in the world, none of them are in Europe. Whatever we do here will help our situation locally but globally... That's a very different task.

There are other problems caused by humans as well, the natural insect population will basically not exist in 20-30 years. We have no mitigation for that or the fact that we'll be starving due to degradation of the land long before we end up dying in floods or whatever caused by climate change.

Personally I'm more in favour of mitigation instead of radical ideas that probably won't make any difference. If we're going to face climate change and more rain then we need more flood barriers for example. We spend billions on 'climate change stuff' but we spend very little on actual defenses against the consequences.

Let's be honest, it's a mess, we even have a 78 year old presidential candidate in the US who doesn't believe that a problem even exists.

 

[metalblue]

I actually think the complete opposite about undoing the damage. I think it is impossible to undo it because it's only going to worsen over the next 10 years. Whatever we do in the UK will be undone by the change in the developing world which is sort of why there is an argument to invest in third world mitigations above all else.

You only have to look at the most pollutive or CO intensive areas in the world, none of them are in Europe. Whatever we do here will help our situation locally but globally... That's a very different task.

There are other problems caused by humans as well, the natural insect population will basically not exist in 20-30 years. We have no mitigation for that or the fact that we'll be starving because of degradation of the land long before we end up dying in floods or whatever caused by climate change.

Personally, I'm more in favour of mitigation instead of radical ideas that probably won't work. If we're going to face climate change and more rain, then we need more flood barriers. We spend billions on 'climate change stuff' but we spend very little on actual defenses against the consequences.

Let's be honest, it's a mess, we even have a 78 year old presidential candidate in the US who doesn't believe that a problem even exists.

I strongly disagree with your statement. Just one example of why; there are fertilisers out there that can capture carbon and improve crop yields. Imagine a world where every crop is grown with fertilisers that capture carbon at the same time. Everyone needs food and these fertilisers might even allowing for crops to be grown in parts of the word they can’t today.

Direct air capture and converting to fuel is possible today - you take the carbon out, recycle it, and use it - put it back out with a fractional increase in carbon each time compared to what burning virgin fossil fuels today.

These are just two examples of where tech is pushing the boundaries of the possible.