Tuesday, 21 February 2017

Mugged by the Tories

Cast your minds back if you can to the 2015 general election. Faced by the possibility of a son  of a communist agitator becoming Prime Minister, propped up by a nasty rabble-rousing single-issue nationalist minority party, the country re-elected the incumbent with an increase in the number of seats. No longer would the Tory PM have to get permission from Nick Clegg to cut the deficit, reform the public sector and the economy, to breathe life and vim into parts of the country moribund after so many years of ignorant socialistic self-defeating rule. Markets would be freed, the public sector refocused on the essentials, assets privatises and taxes cut. The country voted Conservative and the country would thrive.

One of the big discussions in 2010, you may remember, was about Labour's "jobs tax" - a proposed increase in National Insurance "contributions". The Right correctly argued that increasing the cost of employing people reduces the chance that people will be employed. Labour lost that election, quite spectacularly.

Since then we have enjoyed years of firm Tory/Liberal and Tory rule, by what we were led to believe were neo-Thatcherites in softer makeup.

One of George Osborne's triumphs was to increase the personal allowance to take more people out of income tax liability. Championed by right-wingers and lefties alike, this was a bold departure from the Brownian era of fiscal drag on steriods. No more stealthy increases by holding down the thresholds, but a genuine burden reduction. 

Come 2015 the Tories felt confident enough to go a step further. They announced  that the squeeze on relatively higher but still unspectacular earnings had gone far enough: they promised that if elected with a Parliamentary majority they would increase the threshold for paying 40% tax until it reached £50,000 a year.

Well, I have just had a look at the numbers. Very excitingly I am due a £500 a year tax cut when the new thresholds kick in in April. £500 a year is a pretty good tax cut, right? And the threshold isn't even close to the eventual £50k level. There should be plenty more scope for reductions in upcoming  even if my salary doesn't move much.

But wait, what is this? The tax calculator site says that my monthly take-home will be *less* rather than more. Surely some mistake? Ah, I see: my NI "contributions" have bounced by £1000. 

The other day I received a letter encouraging me to donate money to the Tory Party. They had to be kidding, right?


Anonymous said...

It's the fault of the EU. You'll get it back when we leave .....

Anonymous said...

And all you wanted was "my bin collected, my street swept and the occasional police patrol".

Yep, you're the mug.

Anonymous said...

Different anon here.

It's straight out of the Gordon Brown handbook.
But at least they saved us money by freezing the planned increase in fuel duty, that was nice of them.....
What new ways will they take in the next budget?

Anonymous said...

As they say:

'whoever you vote for the Government still gets in'

Blue Eyes said...

One of the Anons keeps telling me I am thick. Luckily I am too stupid to understand the point he is trying to make.

Keep the insults coming as they all bolster CU's summer drinks fund! And as we all know, none of the hyperintelligent faceless keyboard warriors ever turn up - trebles all round!

Anonymous said...

As we have no faces, we cannot drink

Anonymous said...

@Blue Eyes - if you ever have drinkies in t'North I'll cheerfully pop round! :D But I'm not chucking brickbats!

With the government, the current IR35 assault is going to be interesting. They want me to take a 30 - 40% cut whilst still funding my own sick pay, holiday pay and pension. It's just the public sector getting hit for now, but it's just a taster before it's rolled out to the private sector. Already had contact from EU nations and the ME, so I suspect many of us will cheerfully bugger off to more flexible climes like, er, France. I want brexit to work, but if we're intent on reducing workforce flexibility, forcing needed skills out of the country and attacking one man bands, we might as well vote in Corbyn. At least he doesn't pretend to be competent.

Blue Eyes said...

Agreed @9.09

I think I did a rant about the lack of reforms pushing away good people a while back.

Bill Quango MP said...

From 6 April 2016 onwards, all employees will be obliged to pay National Insurance at 12% (on earnings between £8,060 and £43,000). The increase is forecast to bring in an additional £5bn a year for the government.

Blue Eyes said...

Vote Conservative.

Steven_L said...

I don't trust these online calculators, so I'll believe it when I see it, but apparently I'm due another 6%+ increase. I'm up over 30% since 2012. You should get a 'job' at the council BE :)

CityUnslicker said...

There is no low tax party and cannot be.

Labour have one a crucial victory. the NHS has become a national religion and its appetite is insatiable.

Billions more are needed for NHS and Social care and the Tories will raise taxes to keep the middle class public sector vote to ensure this happens.

Because of the deficit, they can't really cut taxes anyway.

if you vote UKIP, your vote is wasted, if you vote Tory taxes will rise, if you vote Labour taxes will rise and the deficit will also rise.

Voting is a least worst thing. The UK needs a fiscally conservative party because it does not have one. The Soho House party perhaps?

Steven_L said...

A party named after an over-priced pub where snooty people pay through the nose to avoid drinking with normal folk isn't going to have a very broad appeal is it?

You might as well call it the Bullingdon Club Party.

Electro-Kevin said...

Sorry to boil your P but the Daily Mail is running a story on a BBC trial to give benefit recipients their £26k in one hit to see what they do with it.

Yes. £26k. (Or £40k untaxed earnings to people who go out to work in the morning.)

This after 7 years of Tories.

Blue Eyes said...

CU you are right on all points. My specific moan is that the Tories won the election with an explicit pledge to cut the taxes of medium earners like me. Instead they are doing the precise opposite. They lied basically.

On a more general point, there is so much public sector that could be slimmed down to make way for more spending on the NHS and "social care" before they need to increase my taxes. Public sector pensions. The triple lock. Tax credits. HS2. Indian space programmes. Scotland.

Yet instead of doing any of that they say hey BE you have worked hard and developed your career, you have saved up and put money away for later life, you have done all the things we say are good, you have not burdened the state and welfare system, you abide by the rules, now give us some more of your damned money!

The Tories promised to cut the deficit by cutting spending rather than raising taxes. That was the precise choice put to the electorate in 2015. Lower spending or higher taxes (Labour's suggestion). People voted for lower spending. Yet what are the Tories doing? They are doing precisely what the electorate rejected!

Basically, society hates me. The parties and institutions loathe me for wanting to stand on my own two feet. I don't even know what social care is. Is it old age care for people who didn't bother to make provision for themselves? Why am I paying for that? Did anyone ask me?

Screw them all. I am quite tempted to stop saving any of my income. I will just piss it up the wall and then go crying to the council when I am old/sick/out of a job. That's what everyone else does.

Blue Eyes said...

EK cutting the benefit cap was one of the most popular policies of recent years, so the Tories have dropped it of course. It's like they see what the Guardian wants them to do and then they do it. FFS.

Anonymous said...

I agree 100% with Blue Eyes.

I can't help but feel Brexit is fooling people into thinking positively about Theresa May.
If Brexit wasn't going on, what would true conservatives think of the current cabinet? Would May's approval rating be as high as it is currently?

Yes Brexit means Brexit but if during the transition complete left-wing socialist and SJW policies are being put in place, then could the end result actually be worse than where started?

Steven_L said...

Sorry to boil your P but the Daily Mail is running a story on a BBC trial to give benefit recipients their £26k in one hit to see what they do with it.

Cheap TV then, as a well-kitted out film crew will burn through £26k in a week or two. I'd imagine some of the more sought after presenters / actors can command that per episode.

... now give us some more of your damned money!

You've probably not paid any tax since 2010 (at least by your measure that ignores fx rates) and actually had every penny of IT and NI back as tax free property price inflation. Inflating house prices - tax free - for middle class southern folk while clobbering the rest of the economy with crippling taxes is the main thrust of tory policy. So why are you whingeing about it?

Screw them all. I am quite tempted to stop saving any of my income. I will just piss it up the wall...

You should do it now, before you're too old to enjoy doing it.

CityUnslicker said...

SL - your last post is interesting...however, the main house price rises have been for properties owned by non-doms....we could not make it up.

I think you will find my Soho House was a joke. The actual party would have to be called Alternative for England...

Blue Eyes said...

Interesting but utter crap. Does SL think that when my flat goes up in value I get a cheque through to post to deposit in my bank account to spend on a new iPhone? Presumably if I win the Premium Bonds I have also "paid no tax"? What if my Diageo shares in my ISA go up in value. Have I paid "no tax". What a fool.

Maybe I would be more content with spending/tax levels if I was on a public sector scheme in Scotland - that well-known net contributing part of the economy.

As anyone who actually reads the post (a skill clearly not required in some careers) will see I am not complaining about everything. I have a nice comfortable life. I am complaining that a) the Tories lied when they said they were going to cut taxes on my income and b) people like me bear a much heavier burden than many others in society/the economy.

It is not a particularly complicated point. Feel free to disagree if you like, but try not to make up nonsense just because you hate Southerners and Homeowners. Or alternatively, why not get join in the tax-free fun yourself?

Anonymous said...

UK Governments in all their forms - right, left, centrist, multicoloured - have only one aim and that is to perpetuate themselves.

Their weapon of choice is inflation and your house does not go up in value. Your currency depreciates.

So why complain about paying more tax. Work it out as a % of your house value.

Steven_L said...

I don't think I would capitalise 'Southerners' but 'Homeowners'???

Aberdeen / commutable to Aberdeen house prices are more linked to the price of oil than the UK credit and land price cycle. So I've done just fine paying a little housekeeping to her indoors thank you very much. If I can reach retirement in sunnier climes never having had a mortgage or otherwise joining in the tories 'housing ladder' pyramid scheme I'll be a happy bunny.

But since they are about to start bunging me £1000 a year I can only take at 60 or when I buy a house, I might have to one day. Then again if they'll probably end up giving into city lobbying and allow people to buy leveraged VIX etns in their lifetime ISA, in which case I can just transfer the money to a spread betting account and take it tax free. We'll see.

But I am joining in, in my own way. I've added to my stake in Bovis this week at book value. I'd stay well away from these 'bond proxy' shares like Diageo if I were you, that Unilever bid was a top signal if ever there was one.

Electro-Kevin said...

Steven L - House price rises are certainly not tax free when you sell the property. So all that London home owners benefit from (if they sit tight, as most of them must to avoid a crash) is the ability to get into more debt.

Electro-Kevin said...

Someone pays the stamp on yours and you pay the stamp on your next.

Blue Eyes said...

And you can only enjoy the capital gain when you no longer need to live somewhere - i.e. when you are dead.

Anonymous said...

@CU - the NHS doesn't need more money, it needs a lot of reform across the board. Same with councils. Won't happen as the beneficiaries tend to be politician greasing companies like Crapita (worked at one of their arms, competence was scarce) and unionised empire builders.

It's infuriating.

rwendland said...

Puzzled by this NI increase. gov.uk has all the main NI rates the same for Tax year 2017-18 as for 2016-17. Main employees's contribution rate is 12% in 2016-17 and same 2017-18. Same with Employer’s rate still at 13.8%. Small inflation and tinkering adjustments to start and end points, but not huge - I make it an employee's £193 NI increase at max (£45k+ salary), employer's contribs about the same.

Even the "Employment Allowance" scheme seems to continue another year - the scheme to reduce NI for 4 national minimum wage employees introduced in 2014.

Can anyone explain the detail of how NI might increase £1000 for one employee on the same employee?


Blue Eyes said...

Thanks Rwendland. I did do a quickie look for the actual numbers but didn't find the horse's mouth.

The killer is the increase of the UEL from about £43k to about £45k. That increases the tax by ten points on that £2k tranche.

BUT - and I hope to be the first to admit a false premise when I see one: I did the same sums on a different online calculator and they came out not nearly as bad as when I crunched the numbers for this post.

So maybe the government is not quite as evil as I thought. However, it is still naughty and Brownian by giving away with one hand and taking away with the other. A proper clarifying simplifying review is long overdue. Imagine trying to explain this complex system to a foreigner!

rwendland said...

BE, yep the UEL change was the only significant one I could see. I made it a £1923/year broadening of the PT-UEL band, turning some of the 2% contribution rates into 12% - i.e. +10%. So about £193/year more at £45k or higher salary.

I tried out a calculator, and it said the NI is the same! So that's two calculators that are wrong - I surmise the calculators are crap on NI!