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Budget

including Budgets
Arborbridge
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Re: Budget

#390273

Postby Arborbridge » February 26th, 2021, 2:32 pm

anon155742 wrote:The covid spending was mainly to protect the elderly, especially those over 75

The fair thing to do would be to apply national insurance to pension income


That's an interesting idea of what's "fair". The elderly didn't ask to be vaccinated first, nor did they agree to foot the bill. As a matter of fact, many older people thought that the working age population ought have been vaccinated first and had no input to the decision.

Arb.

scrumpyjack
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Re: Budget

#390275

Postby scrumpyjack » February 26th, 2021, 2:35 pm

Arborbridge wrote:
anon155742 wrote:The covid spending was mainly to protect the elderly, especially those over 75

The fair thing to do would be to apply national insurance to pension income


That's an interesting idea of what's "fair". The elderly didn't ask to be vaccinated first, nor did they agree to foot the bill. As a matter of fact, many older people thought that the working age population ought have been vaccinated first and had no input to the decision.

Arb.


Not quite true, the lockdown and spending was to protect the Health Service from being swamped and doctors and nurses collapsing from stress. So maybe, on that logic, there should be a special tax on health service workers? Don't think that would go down too well!

Arborbridge
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Re: Budget

#390278

Postby Arborbridge » February 26th, 2021, 2:43 pm

Dod101 wrote:
Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.


What tax increases? I thought the Budget is next week. In any case in what way are they acting like Communists? They are not even hard left or anything like it. You must have a very short memory.

Dod


You are of course correct Dod, but some people believe that the necessary expenditure to throw businesses a lifeline and avoid too much suffering are "socialist".
This is not socialism or communism, but pragmatic conservatism - a generally moderate government doing what it had to do. Indeed, Boris's failing (some might argue) over the pandemic has been his desire for freedom - doing things voluntarily - definitely not the hallmark of a communist approach which would have directed people and thrown them into workcamps if they didn't comply.

Have people forgotten just what a communist government is? Just read up on the Russian system of the thirties to find out - and then come back and tell me Boris, Gove, Hancock, Sunak, are communists :lol: *

Arb.
*PS for anyone seriously interestded, read Orlando Figes, The Whisperers - Private Life in Stalin's Russia.

scrumpyjack
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Re: Budget

#390281

Postby scrumpyjack » February 26th, 2021, 2:46 pm

absolutezero wrote:Do we expect any changes (either way) in the annual ISA allowance of £20,000?


My guess, for what it's worth, which is probably zero, is that he will leave most things alone but

increase corporation tax

restart the fuel tax escalator (green, raises lots of tax easily, doesn't break any manifesto commitments)

might align CGT on shares with that on property (28%). Can't see him taxing it as income without reintroducing indexation, which would bring too many complications.

may reduce some of the CGT allowances for entrepreneurs etc

abolish AIM shares IHT exemption (there isn't really any justification for it)

not make any other significant changes until he sees how the post-covid recovery works out

Cyb3ria
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Re: Budget

#390282

Postby Cyb3ria » February 26th, 2021, 2:47 pm

Arborbridge wrote:
absolutezero wrote:
Cyb3ria wrote:I'm failing to understand this current "Conservative" government. They act like communists leading a socialist party. The tax increases are plainly ridiculous and are going to act as a drain on enterprise and a disincentive to the working population.

The mistake you are making is thinking this is the same political party as the one that had Thatcher and Cameron leading it.

This is New Labour with a blue rosette.
Blue Labour/Red Tories.
They are economically soft left, but socially soft right. In other words, what the British electorate wants.


It's a very mixed government, and quite confusing to those of us used to the old divisions. In some ways, stealing New Labour ideas (to call them communist is incredibly wide of the mark, in my view) but at the same time still retaining some very right wing nasty party actions, and pandering to the right of the party.
It's Boris's attempt to be his one "one-nation" Tory which appeals to all sides - but let's hope he does not have "one-party dictatorship" in mind.

Arb.


A government that has done nothing except spend money at exorbitant rates that it does not have followed by putting feelers out to the press on radical tax changes including a wealth tax, land tax, increases to inheritance tax, etc, etc. I guess that must be good old fashioned conservatism - not.

NeilW
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Re: Budget

#390283

Postby NeilW » February 26th, 2021, 2:48 pm

1nvest wrote: Even swelling the UK debt to 2Tn when real yields are mildly negative is more of a asset than a liability.


All utterly irrelevant. There is no debt in any sense ordinary people would understand it and therefore no material cost to what the UK is currently doing. Gilts are savings. When the savings are finally spent they will generate the taxation necessary to pay for them. Basic accounting. Tax is a geometric series that your average year 10 schoolchild can work out.

There is no need for wealth funds in the UK. We are a net importer and have no need to keep the currency down by refusing to buy other people's exports.

Even issuing Gilts is a political choice. We could just leave people with bank deposits and the base rate at 0%.

Putting tax rates up in this budget would be foolish. Even talking about putting tax rates up is foolish, since that will just make people save more to protect themselves against future tax bills. And it is that 'not spending' saving which causes 'the debt' in the first place.

To coin a phrase, it's the savings stupid. Debt is the accounting counterparty of financial savings.

1nvest
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Re: Budget

#390287

Postby 1nvest » February 26th, 2021, 2:55 pm

scrumpyjack wrote:But much of the new 'Gilts' issued to pay for Covid were simply issued to the Bank of England. They did not even bother issuing them to the market and then buying them back. The BoE hands the interest back to the Treasury, so effectively there is no interest cost and no 3rd party who needs to be paid back or persuaded to roll them over for a new Gilt. There really is no urgency to do anything about this. It was a once in 100 year event so if anything needs to be done, it should be over a 100 year timescale. All that Rishi needs to consider is bringing the current annual budget a bit nearer to balance so the markets don't get too edgy. Everything is relative and our position is not as bad as many other countries.

Yield curve manipulation primarily affects the likes of pension funds that are obliged to hold x% of liabilities matched by Gilts. Pushing yields down means pension funds have to buy more (at higher prices) - feeding further demand. When that starts to unwind so the pension funds might reduce Gilts, lowering demand, pushing yields upwards - again self feeding. There seems to be quite a bit of pent up pressure towards higher inflation, higher yields and as real yields move move positive so each of stocks, bonds and gold will all tend to drop. Even at 4% real, that's a swing of 5% from current -1% type levels. Much more a expensive rate at which to borrow. As such I see things moving more like Japan, where low yields are more likely to remain for the longer term, perhaps with the BoE reducing its holdings by selling to the open market piecemeal over time (very slow/gradual Quantitative Tightening). But I guess flat/no returns for a decade or two is better than others who are more directing towards taking big hits - however sometimes bearing a short duration big hit (pain) followed by a progressive recovery that usually follows can be better than a more constant flatness.

The collapse of the 1970's saw great returns across the 1980's/1990's which to a large extent has resulted in the likes of 4% safe withdrawal rate rules-of-thumb. Outside of that era and it was common for investors to invest in bonds, return-of rather than return-on money, cash-is-king type mindsets. Where -1% year cost is seen as acceptable compared to a rapid -33% or -50% (or more) risk factor.

I suspect no matter what, for other than if a large hit, subsequent progressive increases, that the West will see relative lag/decline. The US has vastly abused its Bretton Woods pledges which has facilitated US dominance. Many such as Ray Dalio are directing their investments towards the East.

Perhaps rather than nothing-has-to-be-done, something should be done. Bailing out the banks for instance has subsequent costs, permitting failure and dealing with that and then more often seeing good progress (short sharp pain and be done with it) can be better than prolonged/extended milder pain.

Arborbridge
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Re: Budget

#390289

Postby Arborbridge » February 26th, 2021, 2:59 pm

Cyb3ria wrote:
A government that has done nothing except spend money at exorbitant rates that it does not have followed by putting feelers out to the press on radical tax changes including a wealth tax, land tax, increases to inheritance tax, etc, etc. I guess that must be good old fashioned conservatism - not.


It's not good old fashioned conservatism - which as we re often told is a "broad church" - but that isn't the issue here. You called this government communist or crypto communist. In my view (and I suspect, in the view of most people on these boards) that is fantastical.

I have already written that this is a confusing government, sometimes seeming to borrow from New Labour, sometimes from the right wing nasty party - but never could it be called communist.

Arb.

scrumpyjack
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Re: Budget

#390290

Postby scrumpyjack » February 26th, 2021, 3:02 pm

The only 'Nasty Party' is the Scottish one, all the other parties are saints by comparison! Wonder what will be in the SNP budget?

Cyb3ria
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Re: Budget

#390294

Postby Cyb3ria » February 26th, 2021, 3:12 pm

Arborbridge wrote:
Cyb3ria wrote:
A government that has done nothing except spend money at exorbitant rates that it does not have followed by putting feelers out to the press on radical tax changes including a wealth tax, land tax, increases to inheritance tax, etc, etc. I guess that must be good old fashioned conservatism - not.


It's not good old fashioned conservatism - which as we re often told is a "broad church" - but that isn't the issue here. You called this government communist or crypto communist. In my view (and I suspect, in the view of most people on these boards) that is fantastical.

I have already written that this is a confusing government, sometimes seeming to borrow from New Labour, sometimes from the right wing nasty party - but never could it be called communist.

Arb.



Fine Arb. Let's wait until the Budget is read out in the Commons. Let's see how it will impact on you. Then you might well revisit these posts and call it what it is and I will be in complete agreement with you.

In my view, the government shouldn't be looking to increase taxation or tweaking the the economy to produce yet another squeeze at this point in time so soon after businesses and individuals have been majorly hit by the pandemic. Let the economy grow and taxation income will grow with it. In fact, it may read counter intuitive but what the government should be doing is reducing taxes to encourage the economy to grow.

Arborbridge
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Re: Budget

#390300

Postby Arborbridge » February 26th, 2021, 3:29 pm

Cyb3ria wrote:
Arborbridge wrote:
Cyb3ria wrote:
A government that has done nothing except spend money at exorbitant rates that it does not have followed by putting feelers out to the press on radical tax changes including a wealth tax, land tax, increases to inheritance tax, etc, etc. I guess that must be good old fashioned conservatism - not.


It's not good old fashioned conservatism - which as we re often told is a "broad church" - but that isn't the issue here. You called this government communist or crypto communist. In my view (and I suspect, in the view of most people on these boards) that is fantastical.

I have already written that this is a confusing government, sometimes seeming to borrow from New Labour, sometimes from the right wing nasty party - but never could it be called communist.

Arb.



Fine Arb. Let's wait until the Budget is read out in the Commons. Let's see how it will impact on you. Then you might well revisit these posts and call it what it is and I will be in complete agreement with you.

In my view, the government shouldn't be looking to increase taxation or tweaking the the economy to produce yet another squeeze at this point in time so soon after businesses and individuals have been majorly hit by the pandemic. Let the economy grow and taxation income will grow with it. In fact, it may read counter intuitive but what the government should be doing is reducing taxes to encourage the economy to grow.


We may not be too far apart in that case, as regards actual policies, and you may be pleasantly surprised. We will see. I doubt the budget will produce anything to change my mind as regards my view that this is not a crypto communist one, even if it impacts on me unfavourably :)


Arb

absolutezero
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Re: Budget

#390305

Postby absolutezero » February 26th, 2021, 3:55 pm

scrumpyjack wrote:
absolutezero wrote:Do we expect any changes (either way) in the annual ISA allowance of £20,000?


My guess, for what it's worth, which is probably zero, is that he will leave most things alone but

increase corporation tax


I can see further 'green' taxes.

But I think he won't raise corp tax. I think it's a bluff to rile up the Labour Party and soften up folk up for something that's not as bad.
"Lucky escape. We could have had 25% corp tax. Could have been worse"

Bit like they do when redundancies are planned.
"There will be 500 redundancies"
No there won't - there will be 100 but if we say 500 then people will accept 100 without question, but if we said 100 straight off people would kick off.

Lootman
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Re: Budget

#390313

Postby Lootman » February 26th, 2021, 4:11 pm

scrumpyjack wrote:might align CGT on shares with that on property (28%). Can't see him taxing it as income without reintroducing indexation, which would bring too many complications.

abolish AIM shares IHT exemption (there isn't really any justification for it)

I get the impression that a fair number of Lemons hold AIM shares at least partly for the IHT benefits. And such positions tend to be held rather than traded. So I would worry that their share prices would be hit if a major tax benefit of them were withdrew overnigbt, given the illiquidity of many of them. Whether the government would care about that is another matter, but at minimum they would have to manage the timing of any announcement in order to prevent a tidal wave of sell orders.

The 20% higher-rate CGT rate might go to 28%, although that is harsh without indexation. But what about the CGT 10% rate for basic-rate taxpayers? Taxing gains as ordinary income would be a very aggressive move and I would not expect that, unless accompanied by some kind of relief or increased allowance or exemption.

Neither is perfect for the government here. IHT is revenue in the future rather than the present, and is considered a voluntary tax by many. Whilst even CGT can be seen as voluntary in the sense that investors do not have to sell, and the government relies on people being honest about their gains, which might happen less if rates were higher.

Dod101
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Re: Budget

#390363

Postby Dod101 » February 26th, 2021, 7:07 pm

anon155742 wrote:The covid spending was mainly to protect the elderly, especially those over 75

The fair thing to do would be to apply national insurance to pension income


That is absolute rubbish. To protect the elderly? IT was to protect the jobs of those normally in work, that does not include many over 75s.

Dod

NeilW
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Re: Budget

#390470

Postby NeilW » February 27th, 2021, 8:13 am

1nvest wrote:Much more a expensive rate at which to borrow.


There is no mechanism by which there can be expensive rates unless the Bank of England permits it. For a yield to go up the price has to go down. If the price goes down and particularly if it goes below par then the BoE can just swap the Gilt for reserves and eliminate it from consideration - saving the government a lot of money. And that halts both the price decline and the increase in rates.

It is the BoE that determines Gilt rates, and the BoE is owned and directed by HM Treasury. At the moment the economy needs spending from somebody or lots of people become unemployed. There is some nervousness because of the build up of savings and no understanding of how much of that may be spent once lockdown lifts. If a lot is spent, earned and respent then that will create a taxation bonanza for the government which will eliminate the next round of Gilt issues anyway. Since there will be fewer Gilts issued and lots of excess reserves there will be no shortage of bids.

The trick in this budget is making sure there is enough economic capacity left free to absorb any potential splurge. Once we know the size of the splurge any spare capacity can be hoovered up later.

NeilW
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Re: Budget

#390474

Postby NeilW » February 27th, 2021, 8:18 am

absolutezero wrote:But I think he won't raise corp tax.


There is a good argument for raising corporation tax, in that it encourages investment spending.

If you really want to go down that road, put up corporation tax and abolish capital allowances - instead allowing all business spending as revenue spending.

Then corporation tax is effectively only paid by companies in the 'cash cow' phase of their development.

Nimrod103
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Re: Budget

#390478

Postby Nimrod103 » February 27th, 2021, 8:41 am

NeilW wrote:
absolutezero wrote:But I think he won't raise corp tax.


There is a good argument for raising corporation tax, in that it encourages investment spending.


Only if deductions for investment are allowed. Which of course means that other taxpayers are paying for investment, whether that is useful investment or not.

NeilW wrote:If you really want to go down that road, put up corporation tax and abolish capital allowances - instead allowing all business spending as revenue spending.

Then corporation tax is effectively only paid by companies in the 'cash cow' phase of their development.


We have been and remain in tax competition with countries like the RoI, which have succeeded in stealing companies from the UK. We should be lowering CT not raising it.

88V8
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Re: Budget

#390535

Postby 88V8 » February 27th, 2021, 11:35 am

NeilW wrote:It is the BoE that determines Gilt rates, and the BoE is owned and directed by HM Treasury

Hang on.
The BoE is independent. So we're told.
Or are you saying that politicians have been lying to us?

SteMiS wrote:
88V8 wrote:Rishi Sunak is under growing pressure to slash beer duty

Why do we need to support the beer and pub industry (in particular)?

Because it's a key part of Britishness.
And because the advantage given to supermarkets is unfair.

V8 (not a great beer drinker, but likes pubs)

SteMiS
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Re: Budget

#390552

Postby SteMiS » February 27th, 2021, 11:59 am

88V8 wrote:
SteMiS wrote:
88V8 wrote:Rishi Sunak is under growing pressure to slash beer duty

Why do we need to support the beer and pub industry (in particular)?

Because it's a key part of Britishness.
And because the advantage given to supermarkets is unfair.

V8 (not a great beer drinker, but likes pubs)

Don't supermarkets pay beer duty?

There is a societal move away from pubs, which is why many are closing. Increasing numbers of people don't believe the extra cost of drinking in a pub is value, compared to whatever increased pleasure (if there is any) that they get from the atmosphere there. I don't see why the government should try and reverse that trend.

dealtn
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Re: Budget

#390560

Postby dealtn » February 27th, 2021, 12:07 pm

SteMiS wrote:Don't supermarkets pay beer duty?



Customers pay beer (and other) duty, businesses collect it on behalf of those able to levy it.


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