UKIP on tax: Big boost for the rich – more poverty for the poor
It seems the UK Independence Party has decided to lure blue-collar workers away from Labour and the Conservatives by promising to push their faces even more firmly into the dirt.
The party’s tax policies, unveiled at UKIP’s conference today (Friday) offer huge benefits to top earners while threatening fewer services to those at the bottom.
At the moment, UK citizens don’t pay tax unless they earn more than £10,000 per year, then they pay a basic rate of 20 per cent on earnings up to £41,865. From £41,866 to £150,000, 40 per cent is payable, and an ‘additional rate’ of 45 per cent is paid on anything over £150,000.
UKIP would raise the tax-free personal allowance to £13,500, with the basic rate being increased to cover earnings up to £44,000. Then the 40p rate would be cut to 35p for people earning between £44,000 and £55,000, and those earning more would pay 40p, with the ‘additional rate’ scrapped.
Huge benefits for the obscenely rich, moderate benefits for the modestly well-off, and what do the poor get?
They get a tax-receipt black hole of at least £12 billion every year.
UKIP reckons this won’t matter, because the loss would be wiped out by savings made from leaving the EU, cutting the foreign aid budget by 85 per cent and cancelling the HS2 rail link.
The trouble is, some experts reckon the changes would cost £20 billion, meaning deeper spending cuts that would impact most strongly on services for the poorest in society.
Not only that, but there is no way of knowing what effect leaving the EU will have on the economy. The European Union is the UK’s main trading partner, with contracts worth more than £400 billion a year. How many of those will remain? And what about the UK citizens currently living in the EU? There are around two million of them, if memory serves correctly. Will they lose their jobs and be sent back here? Will those who have retired be told they can’t stay any more, as they aren’t EU citizens?
What will that do to the UK?
It seems that former Treasury official James Meadway, now senior economist at the New Economics Foundation, has the right idea. He said the proposals would be a “social catastrophe” if implemented.
“What they’re proposing is a hugely expensive means to make the tax system even more unfair. The ‘blue-collar’ stuff is just so much windbaggery and spin – this is a tax proposal that will benefit the richest most, whilst slashing the amount of money available for the public services we all need,” he said.
What a good thing it’s not going to happen, as Nigel Farage and his chums are only contesting around 12 seats.
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it was a good speech but with regret the public in a vote will not wont to leave the EU just as Scotland voted against independence
overall the speech by Nigel Farage is meaningless as it’s not what the public at large wont
*Want*
Mike sivier on ukip wrong as usual. what makes you think the people of Britain want to stay in a corruption ridden democratically deficient body nick.
I have the facts, Barry. I notice they are absent from your post.
By getting our foreign aid budget back under control and bringing home the money that goes to pay our EU membership subs you are immediately looking at a £20billion a year saving. By reforming the Barnett Formula that treats English taxpayers so unfairly you can save several billion more.
When we publish our manifesto for next year’s general election, at the outset of the campaign, our whole programme will be finalised and rigorously costed. But this week we are setting out some of our key priorities to be financed out of the savings we have already identified.
So – yes to letting people earn a basic living for themselves before the state starts asking them to pay income tax to fund the lives of others. UKIP will support a personal allowance that is equivalent to full-time minimum wage earnings – expected to be around £13,500 by the time of the general election. Our MPs will champion this and vote for it in the House of Commons during the next parliament, hoping to find others of like mind with whom to make common cause.
Perhaps this is why Mr Osborne is making so many more people pay the 40p rate. Why he has lowered the threshold for it from the £43,875 that he inherited from Alistair Darling to £41,865 this year.
At the last Budget, UKIP said that our policy would be to raise the 40% tax threshold to at least £45,000. Well, today we are able to make a better offer.
The policy we will take into the next parliament will be to cut the 40% rate where it starts to 35%. So a 35% rate would start at earnings just above £42,000 and apply all the way up to £55,000. Only at earnings of £55,000 would the 40% rate become payable.
And in time, we would like to go further. An eventual tax structure of a personal allowance at the level of the full-time minimum wage, followed by a 20p standard rate, a 30p intermediate rate and a 40p top rate would be simpler, flatter and in my view compatible with both a dynamic economy and a fair society.
But that is a longer-term aspiration. Politics is all about priorities and our priority has to be to help those at the bottom of the earnings scale and then show we are also on the side of those who have reached the middle ranges and wish to achieve even more.
Well, let me tell you what UKIP wants to do to inheritance tax; scrap it altogether
UKIP proposes that a Treasury Commission, using the best brains of that elite Whitehall department, be set up to design a turnover tax for large businesses. Every major company would have to show it had paid a set proportion of its turnover in corporation and other taxes or would face an additional charge to bring it up to the minimum. This would work as a back stop for the tax system and ensure that every big company pays a fair share of tax.
I want it to investigate the feasibility of imposing a luxury goods rate of VAT. It makes no sense to me that VAT is levied at the same rate on budget items purchased by the hard-pressed as it is on premium ones that are the preserve of the very well heeled. And it seems to me that a luxury goods rate of 25 per cent could raise substantial extra funds from the wealthiest people. I would suggest such a rate be built around simple thresholds such as £200 for a pair of shoes, £1,000 for a bag or £50,000 for a new car.
The Treasury calls it “tax free shopping”. It basically means that foreign nationals can claim back the VAT paid on purchases by filling out a form at the airport. So foreign tycoons can get 20 per cent off their purchases in London, thanks to a Treasury waiver that is in turn bankrolled by ordinary British taxpayers.
The Treasury is very coy about how much revenue is lost to VAT rebates to foreigners. But HMRC calculates that it is at least £300million a year and I have seen estimates which point to it being significantly higher. This perk should be scrapped.
Hi Mike
You’ve mixed up taxable income with earnings. The BBC is in fact correct with the £41,865 earnings figure for the top of the 20% band.
I’m assuming you don’t have a working knowledge of the tax system, so you might have simply googled the HMRC site and seen the following rates?…
0-31,865 20%
31,866-150,000 40%
150,000+ 45%
…but they refer to taxable income rather than earnings, as the first 10k of earnings is tax free (for those earning 100k or less. The 10k taxable allowance band actually tapers off after 100k and becomes nil at 120k).
The tax rate bands with reference to earnings (as opposed to taxable income) are therefore as follows:
0-10,000 0%
10,001-41,865 20% (as the BBC correctly stated)
41,866-150,000 40%
150,000+ 45%
There are plenty of tax calculators available which will confirm the above, and they may be useful for your future calculations.. e.g. http://www.listentotaxman.com/index.php
Your paragraph, when corrected, should read…”At the moment, UK citizens don’t pay tax unless they earn more than £10,000 per year, then they pay a basic rate of 20 per cent on earnings up to £41,865 [Remove BBC comment]. From £41,866 to £150,000, 40 per cent is payable, and an ‘additional rate’ of 45 per cent is paid on anything over £150,000.”
All the best.
In fact I used the BBC figures, then got criticised for getting the figures wrong by a commenter on Facebook and went to HMRC at their request.
The HMRC site seems to be at fault, though. I mean, I am aware of the £10k exemption but the fact that the site took that into account completely passed me by.
Maybe I’m just working too hard…
Thank you Maureen, I too had missed it. :-(
It is a very expensive way of lowering tax for the poor as everyone gets to pay less tax unless, you increase the rate so that it’s ‘revenue neutral’ for those earning more. Has UKIP said any more about tax credits which make a lot of difference for those on low incomes?The last I heard they were against them.