Labour did increase income tax via the NI route (they are effectively the same tax for anyone between the ages of 16-65). I agree entirely about VAT.
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- Thread starter simonsimon
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Labour did increase income tax via the NI route (they are effectively the same tax for anyone between the ages of 16-65). I agree entirely about VAT.
That's a complete lie....
... It was an expensive lunch
Daily Mail has all the gory details
VAT rise: Alan Johnson worried how poor will cope goes for 2-hour Savoy lunch | Mail Online
I can't see Johnson being in his job for too much longer TBH, he's been a walking disaster
Tubby Mondays
Well-known member
Im happy to.
Six months after failing to win an election that he should have pissed (as Labour had 'f***ed the country' and 'spunked all the money'), David Cameron employed a photographer to take nice pictures of him and an image consultant, not out of Conservative Party money but from out of Tax Payers money. It was discussed in some detail onthese very pages.
I take it you are au fait with what I mean by public schoolboy, the traditional public schoolboy pursuit of the biscuit game and the term fuckwit.
ROSM
Well-known member
Trying to get this back on track, these threads always bring a wide range of theories and comment about the uk debt. In reality the current position is that the uk is £843bn in debt which is approx 57% of GDP excluding the bank bailout. If you include this it comes to 952bn which is 64%. The financial sector intervention is not seen as true debt as the government now holds equity so it could be seen as an investment.
This does no include any guarantees given to the mortgage and finance sector that may in theory get taken up, nor future pension or pfi commitments which aren't yet part of the debt but do show how difficult it will be to cut debt in the future.
Whilst the numbers are huge, the real measure of any debt is the percentage against income (for example my credit card debt of 500£ when i was a student would be seen as worse than a debt of £1000 when i had been working for 2 years) hence why the percentage of GDP piece is significant.
When Labour came into power in 1997 debt was 43% of GDP. This reduced to 29% by 2002. It rose to 40% in 2007 due to the programme of spending on education and health which many would argue was require given the lack of real terms investment in the 80s and 90s. There was also a significant increase in social security costs. However up to the financial crash of 2008 the situation wasn't as bad as had been inherited and was under control. It is therefore fair to say that the financial crash was the piece that has caused the concerns we now have. Our debt is growing mainly due to interest which is minimal and reduced tax/increased unemployment benefit.
We had also repaid our war debt in that period.
So given this, the questions that many will struggle with are;
1) do you believe that things are worse than had been forecast by the last government?
2) does the current government have the right plan to manage the situation?
My view and many on the labour supporting side is that
1) no they clearly aren't and anybody who gets taken in by the con dem spin is a fool. The situation in the first 6 month post the election was better than forecast as debt was growing slower than forecast and income was increasing. However in November after the emergency budget the debt grew quicker.
2) no for the reasons given in the answer to 1) cuts too soon and too fast would damage recovery and the confidence required to get us out of this was clearly damaged by the plans. It would seem that the plans of labour had been working. In those terms a rise of vat is a bad thing to do at this time both in terms of who It hits and when it happens.
Sorry for the essay but I get frustrated by the rubbish spouted by some on both sides of this debate.
This does no include any guarantees given to the mortgage and finance sector that may in theory get taken up, nor future pension or pfi commitments which aren't yet part of the debt but do show how difficult it will be to cut debt in the future.
Whilst the numbers are huge, the real measure of any debt is the percentage against income (for example my credit card debt of 500£ when i was a student would be seen as worse than a debt of £1000 when i had been working for 2 years) hence why the percentage of GDP piece is significant.
When Labour came into power in 1997 debt was 43% of GDP. This reduced to 29% by 2002. It rose to 40% in 2007 due to the programme of spending on education and health which many would argue was require given the lack of real terms investment in the 80s and 90s. There was also a significant increase in social security costs. However up to the financial crash of 2008 the situation wasn't as bad as had been inherited and was under control. It is therefore fair to say that the financial crash was the piece that has caused the concerns we now have. Our debt is growing mainly due to interest which is minimal and reduced tax/increased unemployment benefit.
We had also repaid our war debt in that period.
So given this, the questions that many will struggle with are;
1) do you believe that things are worse than had been forecast by the last government?
2) does the current government have the right plan to manage the situation?
My view and many on the labour supporting side is that
1) no they clearly aren't and anybody who gets taken in by the con dem spin is a fool. The situation in the first 6 month post the election was better than forecast as debt was growing slower than forecast and income was increasing. However in November after the emergency budget the debt grew quicker.
2) no for the reasons given in the answer to 1) cuts too soon and too fast would damage recovery and the confidence required to get us out of this was clearly damaged by the plans. It would seem that the plans of labour had been working. In those terms a rise of vat is a bad thing to do at this time both in terms of who It hits and when it happens.
Sorry for the essay but I get frustrated by the rubbish spouted by some on both sides of this debate.
Mr Burns
New member
No, please explain?
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,031
carefull now, thats dangerously sensible comment.
an odd choice of increase NI, which is "regressive" and impacted everyone. even Labour with their huge majority didnt think they could touch income tax. but what im even more surprised about is that they never resolved the obvious anomoly of NI upper limit, no idea why they didnt remove that and in effect tax higher tax rate payers 10% more. chose to use the higher profile income tax instead.
I suspect that ALL parties think that taxing middle England on £35k a year at 50% is a certain vote loser.
It's not regressive though, pensioners, who tend to be lower income, do not pay NI. They do however pay VAT on many of their purchases, although according to some posters on here they shouldn't be allowed chocolate, a pint or cars.
I have a feeling that one's aimed at me ! I haven't said pensioners or indeed those awful poor people shouldn't be able to buy VAT rated goods. What I'm arguing is that VAT doesn't necessarily hit the lower incomed people greater than the rich i.e. it's not entirely a regressive tax. In many cases it is a tax that can be avoided if one wishes by not buying as many VAT rated goods. As a percentage those on low incomes do indeed pay more VAT but as an amount they don't. It's much more likely that those on a large income will contribute more to the VAT bucket. I just don't agree with this "it's a regressive tax" argument - it is both regressive and progressive it depends how it's counted. As I've already stated - I think it's the lesser of a number of evils mainly due to the possibility of avoiding it in SOME aspects.
Tubby Mondays
Well-known member
All very sensible and as far as Im aware correct.
Unfortunately youve hit the nail on the head when you mention 'essay' as its not easy to put in a soundbite which is what is needed these days, whereas 'we are cutting and its all Labours fault' is. The debt is a good excuse for the tories and is allowing them to implement their ideological policies under the banner of cutting debt.
sten_super
Brain Surgeon
I don't think you can accuse the Tories of soundbiting any more than Labour have; the only thing I'd argue is that Labour are better at it so it doesn't sound so forced!
I genuinely don't understand the constant references to debt cutting measures such as the VAT rise as being part of some kind of Tory ideology. Cameron and the rest are supposed to be free market conservatives, intent on shrinking the size of the state; how does that square with an increase in taxation (albeit indirect rather than direct)? Benefit cuts I can see, but tax rises?
Uncle C
Well-known member
Labour's Alan Johnson tours the radio stations mouthing off about VAT and then hits the Savoy for a spot of lunch
http://www.dailymail.co.uk/news/article-1344214/VAT-rise-Alan-Johnson-worried-poor-cope-goes-2-hour-Savoy-lunch.html
http://www.dailymail.co.uk/news/article-1344214/VAT-rise-Alan-Johnson-worried-poor-cope-goes-2-hour-Savoy-lunch.html
Tubby Mondays
Well-known member
I meant politics as a whole relying on soundbites these days.
Tax rises now will pay for the cut in income tax for certain people when it gets to voting time. Aleays has always will.
sten_super
Brain Surgeon
Alan Johnson was an absolutely mental choice for shadow Chancellor when they have two other great candidates on the front bench. Mental.
sten_super
Brain Surgeon
I agree with that, but it doesn't really explain how it fits into their ideology? My major criticism of the previous Labour administration was that they spent spent spent even when times were good, rather than saving for a rainy day, and that was largely so that they could keep the electorate sweet during a time when due to natural disillusionment with the sitting government and unpopular decisions such as the Iraq war their popularity was waning.
ROSM
Well-known member
I know all political threads come back to the iron lady, but the use of indirect taxation was a favourite approach of Mrs t so you could argue it meets their current and recent ideology. And as it has limited impact in relevant terms on through richer quartile of society and certain entrepreneurial sectors it does meet their aims.
It wasn't aimed at you!
I agree that those on large incomes do pay more VAT on a dollar/pound basis than pensioners, but on a proportionate basis that is not the case.
If you look at the findings of the Institute of Fiscal Studies, who are not particularly left leaning, they conclude that the poorest 10% of the population will be 2.2% worse off as a result of the VAT rise, compared to 0.95% for the richest 10%. This is based on consumers not changing their spending habits, which as far as I am aware, is not one of Gideon's goals.
That in my eyes means the tax rise is regressive. If people think that hitting pensioners harder than bankers is fair then they are entitled to their opinion, it's not a view I share that is all.
sten_super
Brain Surgeon
I can't find the IFS study that suggests that the poorest will suffer by 2.2%, but that figure sounds fishy to me given that the price increase is only 2.1%, and there are obvious exceptions to VAT such as food.
They also have a bit of a history of creating all kinds of research depending upon what agenda they want to promote; see http://www.ifs.org.uk/budgets/gb2009/09chap10.pdf which suggests that, based upon spending rather than income, VAT is actually progressive. I'm not saying that this is correct, merely showing that they aren't necessarily sending a consistent message.
ROSM
Well-known member
That's a bit harsh. I read that research on the BBC website, which also then gave a view as to why vat was a progressive tax.
Here:
BBC News - Is the VAT increase regressive?
Now if we're into agendas I could ask why despite me demonstrating that the fallacy that labour spent spent and spent should be viewed in the context of reduced in terms of percentage of GDP from what they inherited, prior to the financial crash, you still then go on and repeat it a few posts later?
sten_super
Brain Surgeon
Thanks for that. I see that the research is presented in a more balanced way than I had been led to believe. The expenditure approach is an interesting way of measuring the impact, although even then I think it's a struggle to truly describe it as progressive. I wonder if the 2.2% number comes around due to them excluding some benefit measures or similar.
I'm not suggesting that the IFS are not impartial or anything like that. However this research is carried out by one or more individuals, who are bound to have their own views, etc. which often emerge in this kind of work. I have read plenty of academic papers which contain exactly the same kind of bias.
I actually wrote a long riposte to your initial post (#104) but NSC decided to delete it for me rather than posting. You state that the debt was 43% of GDP in 1997 and then would be 57% without the bank bailout. That's a 14% increase over 11(?) years, which is a fair old rate, especially when you consider that GDP grew by around 3% per annum over the same period. You also defend the increase post-2002 by saying that it went on needed infrastructure; however I'd imagine that if the infrastructure was that desperately required surely it would have been initiated as soon as Labour came into power, rather than five years later?
However that wasn't really the point of my post (#115). Labour's spending was not reckless necessarily because of the size of it, but more because they were actually doing it, when a more sensible policy may have been to put some of it aside for a rainy day. Gordon's folly was seemingly truly believing that he had reached the end of boom and bust; then, when the bust inevitably arrived there wasn't a freely available pot of money to spend to help us out of it.