Tag Archives: national insurance

Coronavirus: Tories threaten tax increase on self-employed after non-offer of help

Rishi Sunak: his promises are worthless – but you can bet he’ll follow through on his threats.

Typical Tories: they make a long list of promises that get broken within a week and then try to charge us a fortune for them.

So, with the self-employed, they’ve offered to pay 80 per cent of normal profits (not wages, as with employees).

But they won’t even start providing this until some time in June.

And self-employed people will be taxed for receiving that money.

And in the meantime, they want any of us whose income stream dries up to claim Universal Credit, joining an online/telephone queue of tens of thousands, as the Department for Work and Pensions is completely unable to cope.

This is the (bad) deal that Chancellor Rishi Sunak has offered – to 85 per cent of self-employed people.

And now, days later, he’s telling us he’ll increase National Insurance paid by all self-employed people because he says this excuse for a bailout makes it impossible to justify them paying less than others.

It’s a con.

Chances are that self-employed people won’t get anything – or will receive next-to-nothing; certainly not enough to cover their outgoings.

And they will be made to pay many times more than they receive in the years to come.

That is what’s “harder to justify”.

We don’t have a government – we have a gang of thieves. And they are using an epidemic to justify their daylight robbery.

Source: Coronavirus: Chancellor warns self-employed they face tax hike after crisis – Mirror Online

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Here’s the reason I’m not convinced the government can’t afford everyone’s pension

You know the Tory government is saying it has to raise the pension age – for everyone – to 67 because it can’t afford to pay everybody under the original conditions?

I have a doubt about that.

You see, the current basic pension rate is around £130 per week (although the maximum is £168.60)

And in January this year, the National Insurance Fund that is supposed to pay for it was in surplus by £24,221,220,000 (see the image above).

Admittedly, considering the number of pensioners in the UK (12 million), it would take only 16 weeks to spend that enormous amount.

But it’s being topped up constantly, it makes money from investments – and the pension-age population is falling because of Tory policies.

That’s why this fund is increasing steadily; on March 31 it stood at £29.5 billion.

And, of course, it would increase much more rapidly if working people were paid properly for the work they do.

Do you get the feeling someone is lying to you?

AFTERWORD: This article has provoked a considerable amount of criticism on Twitter, from some people who claimed to be pensions experts but turned out to be nothing of the sort, and from a few who actually turned out to have something to say.

It is a complicated issue, of course.

But nothing I’ve read has shown the problems are insurmountable by any method other than cutting back the number of people eligible to receive pensions – especially in a nation where wages are being depressed below subsistence levels for working people, while the super-rich are enjoying huge tax breaks (and Boris Johnson is said to want to extend that to cuts in their NI liability too). There are other possibilities, also.

My ultimate feeling, after smiling through the insults and ignorance of many (and the attempts to inform of a few) is still that someone is lying – about the facts of the situation and about what can be done.

I’d like a few opinions from people who don’t claim to be experts on this topic. Do you think that the authorities have been honest about this?

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Johnson’s Brexit policy means UK will be MUCH better-off under LABOUR

Valueless: Oscar Wilde said a cynic knows the price of everything and the value of nothing. Boris Johnson doesn’t even know the price of anything. Perhaps that is why he is spaffing your money up the wall like a fool.

Listen to this:

John McDonnell was referring to a report by the respected Institute of Fiscal Studies (IFS), stating that the UK will be £110 billion better-off under a Labour government than with Tory rule, by 2022.

The IFS stated that the outlook for the public finances has “worsened dramatically” since the spring and will deteriorate further if the UK leaves the European Union without a deal.

There can be few clearer statements that Boris Johnson’s leadership is a threat to the United Kingdom and everyone in it.

The report stated that the government’s current spending plans, including a £13.4 billion increase to meet Mr Johnson’s promises on police and schools (but not – notice – the NHS) mean the budget deficit was likely to be £52.3bn in 2020-21, more than double the £21bn forecast by the OBR in March.

But Mr Johnson also promised huge tax giveaways for the rich in his leadership campaign including cuts to Income Tax and National Insurance. If he goes ahead with these, he will harm the national finances even more brutally.

No doubt Mr Johnson – and his chancellor Sajid Javid – will come out with some mealy-mouthed excuse to pacify us all. It will probably involve another claim that the Conservatives are the “party of financial responsibility” and “Labour will bankrupt the country”. But it’s a funny thing – if they think Labour’s fiscal plans are so harmful, why has IFS director Paul Johnson claimed that their own current ideas are almost identical to Labour’s from 2017?

Most tellingly, of course, we know that Boris Johnson is a liar.

You cannot trust him when he says he’ll fund the police. You cannot trust him when he says he’ll fund schools. You cannot trust him when he says he’ll fund our NHS. You cannot trust him when he says he’ll cut tax. And you absolutely cannot trust him when he says the UK will be better-off after his Brexit.

He thinks you’ll vote for him in an election likely to happen before Christmas. Just remember this:

If you vote for a liar, you will only get broken promises.

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A quick thought about the Conservative ‘tax lock’ silliness

Anyone who thinks David Cameron’s promise of a five-year ‘tax lock’ is a good idea must need psychiatric help.

Cameron promised to introduce a law banning income tax, VAT or national insurance increases in the next parliament if the Conservative Party is elected back into office, clearly in the belief that anybody on average wages or less is too stupid to know what this means.

We know better, don’t we?

We know that taxes are set according to each income group’s ability to pay. This means that people in the lowest taxable bracket pay the lowest amount, as they need most of the money they earn in order to pay their way. The amount of tax then increases by increments up to the highest earners – who take home considerably more than they need to survive, and who can therefore afford to contribute a much larger amount with no impact on their quality of life.

We also know that a five-year ‘tax lock’ will not affect the lowest-earning people at all. Nobody earning up to £10,600 pays any tax at the moment, so a freeze on nothing is still nothing.

What will it do to the people in the highest tax bracket? Well, it depends what they earn and how fast their pay increases, doesn’t it? Let’s have a look at the handy guide to average UK pay rises, created by fellow blogger Tom Pride last November:

141112average-uk-pay-risesTomPride

So the director of a FTSE 100 company, paid the average amount of a mere £2.4 million, would have contributed 45 per cent in tax, or £1.08 million in the 2014-15 tax year. Over a five-year period, if that person’s income continued to rise at 14 per cent, then by 2020 – at a 45 per cent tax rate – they would pay a total of £8,138,360 in tax over the years until 2020. That’s certainly a respectable figure.

But Labour has proposed an increase in the top rate of tax, back to 50 per cent. Under the same conditions, this would mean FTSE 100 directors earning £2.4 million in the tax year 2014-15 would pay £9,042,623.

That’s a difference of £904,263; nearly a million pounds each.

This writer doesn’t have current figures for banker salaries and cannot, therefore, work out how much tax they would pay – but you can see for yourself that the difference between the two scenarios is likely to come to several million pounds per top banker.

Those people don’t need that amount of money in order to survive. The cost of living in the UK is less than 1/50 of what the FTSE directors take home, let alone the bankers. But David Cameron wants them to keep that money.

Meanwhile the UK Treasury goes without millions of pounds that could be used to help balance the national deficit, pay off the national debt, and boost the economy.

We’re back to ‘Starve the Beast’ economics again. The nation’s finances can go to Hell, as far as Cameron is concerned. He wants to starve the Treasury with tax cuts for the rich – either actual cuts or de facto cuts like his ‘tax lock’ – and then claim that public services cost too much and will have to be scrapped or sold off to rich corporations in return for donations to the Conservative Party – as we have seen in the years of the Coalition Government (most obviously in the case of the NHS).

Unless you are a banker, an FTSE100 director, or a member of Parliament, you would be mad to support such a wasteful and selfish plan.

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The Coalition is withholding billions that could be used to support the NHS

inflation

It seems we owe thanks to Labour’s former deputy Prime Minister, John Prescott, for discovering a revealing accounting measure by the Coalition Government, meaning Chancellor George Osborne has yet again failed to cover his a**e.

According to Mr Prescott, figures from the House of Lords Library show the government spent £106 billion from National Insurance (NI) contributions last year – the benefit system received £85 billion and the NHS got £21 billion.

But he was “stunned” to find the Government last year held back nearly £30 billion.

“National ­Insurance money can only be used for the NHS or benefits,” Mr Prescott was quoted as saying. “So since he can’t spend it on anything else and chooses not to fund ­hospitals, the Chancellor lets it sit there.”

Mr Prescott recommended that the surplus should be used to help shore up a buckling NHS – but it seems clear that there is enough, not only to clear the health service’s debt but also to reverse all the devastating changes to the benefit system as well.

Let us hope a future Labour government remembers how to do the right thing.

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Is Iain Duncan Smith legalising breach of contract?

Iain 'Daftie' Duncan Smith before a previous hearing of the Work and Pensions committee.

Iain ‘Daftie’ Duncan Smith before a previous hearing of the Work and Pensions committee.

Here’s something mentioned during Iain Duncan Smith’s session before the Commons Work and Pensions committee last week, that doesn’t seem to have enjoyed enough attention: It seems Daftie Duncan Smith wants to legalise breach of contract.

He reckons part-time workers should be sanctioned off their top-up benefits if they refuse extra hours offered by their employer.

The sanctions would apply under the Universal Credit system – which is never going to work anyway – so perhaps this is an inconsequential matter, but it is disturbing that the Secretary of State for Work and Pensions understands so little about contracts of employment that he thinks this is a reasonable way to behave.

He told the Work and Pensions committee: “That is being investigated, as to whether we can now work to in-work sanctions – in other words, conditionality – so people get an opportunity to move up the hours if they can, and if they don’t wish to do that, we will see whether or not that system of conditionality works.”

Perhaps he doesn’t realise that some people are only able to work a certain number of hours per week, and that any increase means they will not be able to continue in the job. Perhaps he doesn’t realise that this will make them unemployed, and his “conditionality” prank means that they would be sanctioned off being able to claim benefits for a period of time after that, meaning they would be doubly punished for a situation that was not their fault.

Perhaps he doesn’t care. Yes, that seems more likely.

He certainly doesn’t understand contract law. When two parties enter into a contract of employment, it is a binding agreement on both of them – and if it is not honoured by either party – for example, if the employer tells the employee that their hours of work will be extended, rather than negotiating a change in the contract that is agreeable to both – then that party is said to be in breach of that contract.

And does this not open HM Revenue and Customs up to a potential explosion of Income Tax and National Insurance fraud?

Look at the situation Vox Political reported recently, in which a JSA claimant interviewed for a job lasting 22.5 hours per week and then had to turn it down when managers tried to increase the hours to 40; the employer told the Job Centre and he was sanctioned.

He had his benefit reinstated when he reported the employer for potential tax evasion and then told JSA decision makers what he had done, making it clear that he did not see why his benefit should be docked for refusing to take part in an illegal act.

Did Daftie consider this? Or did he think it would be okay because his government wants to reduce the amount of Income Tax it receives anyway, in order to justify cutting public services or selling them off to fatcat tax-avoiding businesspeople?

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Sign our petition to kill Osborne’s ‘tax statement’ propaganda sheet

141104taxleaflet2

[Image: Daily Mirror.]

Remember when the Transparency of Lobbying, Third-Party Campaigning and Trade Union Administration Act (otherwise known as the Gagging Act) was passed, in January this year? Vox Political warned that it marked the end of free speech and free protest in the UK.

The article showed that the new law means you may no longer link up with others to protest government actions in any meaningful way – as such action may breach Liberal Democrat and Tory government-imposed spending limits. Your personal complaints will be deemed unrepresentative of the people.

In that article, this blog asked why the government has launched its attack on free speech and free protest, and suggested the following: Perhaps it wants to control the information you receive, on which you base your voting intentions?

This week we received confirmation of that theory – or at least, some of us did.

The ‘tax statements’ being sent out to Income Taxpayers by the Treasury – on the orders of George Osborne – are nothing less than party political electioneering, being carried out using those taxpayers’ own money rather than the Tory Party’s funds. The leaflet is worded in a very carefully-chosen way that betrays a clear intention to mislead readers – most particularly about the amount of our Income Tax that is spent on ‘welfare’.

To illustrate the extent of the problem: We cannot say this is the same as social security, as – according to the terms of the leaflet – it isn’t. Apparently a quarter of our money is spent on ‘welfare’, which is then broken down into bizarre categories like ‘social protection’ – including, alongside social security, personal care services which nobody has defined as ‘welfare’ until know, and the pensions of retired mandarins, colonels and lowlier public servants who will be appalled to hear their hard-earned retirement provision re-labelled as ‘welfare’, according to The Guardian‘s editorial on the subject. David Cameron’s pension would be defined as ‘welfare’, according to this categorisation.

Meanwhile, state pensions have been defined as being paid from an entirely different source (they aren’t), in order to safeguard the Grey vote from the indignation that – clearly – this piece of politically-prompted propaganda is intended to stoke.

The fact is that – as the Mirror points out – Income Taxpayers put a lot more than 12p in every pound towards pensions, and a lot less than 24p in every pound towards working-age benefits.

Here are another couple of tricks – possibly the nastiest of the lot: Firstly, the leaflet does not make it clear that ‘welfare’ payments are made to people who have a right to them “because of family or medical circumstance, or indeed a record of national insurance contributions”. The impression foisted on the reader is of “unearned handouts to the poor”, according to the Guardian editorial.

Secondly, the leaflet as a whole does not mention the contribution of VAT payments to the national purse. This is because the government has cut Income Tax (irrationally – it has a huge deficit and debt to pay off but has reduced its own income). The thinking behind this is that people will think they have been allowed to keep more of the money they have earned. But the same government has increased VAT, meaning that – in fact – people are being taxed more heavily!

What is the intended result of all this deception? It is as Vox Political described, back in January:

“You would be led to believe that the governments policies are working, exactly the way the government says they are working.

“You would not have any reason to believe that the government is lying to you on a daily basis.

“You would be tranquillised.

“Anaesthetised.

“Compliant.”

What a relief that nobody believes that filthy liar Osborne – even his own backbenchers!

This is how they see him – offering empty promises as a ‘carrot’ to encourage voters to support the Tories.

Osborne’s behaviour is so appalling that this blog has started a petition, calling on the government to withdraw these propaganda sheets that pretend to be official government information – and apologise for ever releasing them in the first place.

It is on the Change.org website, please sign it by clicking here.

Other blogs on the ‘tax summaries’ are available from Virtual Gherkin and Same Difference.

We must not allow this abuse of public authority – and public funds – to take place.

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Happier workers really do make more profit, report shows

More respect, please: If company bosses stop trying to wring every last ounce of profit out of workers while paying them a pittance, and start treating them well instead, they'll be surprised at how well their firm starts to perform, according to a new report.

More respect, please: If company bosses stop trying to wring every last ounce of profit out of workers while paying them a pittance, and start treating them well instead, they’ll be surprised at how well their firm starts to perform, according to a new report.

The nice folk at NIESR have produced a new report that supports something this blog has been saying for many years – that businesses make more profit if they take better care of their workforce.

The report is headed Happier workers, higher profits? and states: “We found those workplaces with rising employee job satisfaction also experienced improvements in workplace performance, while deteriorating employee job satisfaction is detrimental to workplace performance.

“Employee job satisfaction was found to be positively associated with workplace financial performance, labour productivity, the quality of output and service and an additive scale combining all three aspects of performance.

“Workplaces experiencing an improvement in non-pecuniary job satisfaction… also experience an improvement in performance.

“By contrast, there was no robust association between job-related affect (measured in terms of the amount of time feeling tense, depressed, worried, gloomy, uneasy and miserable) and workplace performance, nor pay satisfaction and workplace performance.”

The conclusion is that “these findings are consistent with the proposition that employers who are able to raise employees’ job satisfaction may see improvements in workplace profitability (financial performance), labour productivity and the quality of output or service [bolding mine, for reasons that will become apparent].

“Although we cannot state definitively that the link between increasing job satisfaction and improved workplace performance is causal, the findings are robust to tests for reverse causation and persist within workplaces over time, so that we can discount the possibility that the results are driven by fixed unobservable differences between workplaces.

“There is therefore a prima facie case for employers to consider investing in the wellbeing of their employees on the basis of the likely performance benefits.”

This ties in very closely with Vox Political‘s many comments on the Living Wage. The relationship is obvious: Pay somebody enough that they don’t need to ask for State benefits and their sense of self-worth increases hugely.

Here’s what this blog said on the subject back in April last year: “If a person receives enough, in return for their work, to pay their way in the world without having to take state benefits, several things happen.

“They feel valued in their position, and try harder. The quality of their work improves, along with that of the other workers in the company who also receive the living wage, and as a result, the employer is likely to benefit from improved orders. The company flourishes [increased productivity] and is able to take on more employees.

“As a result of this, the firm and its employees are able to pay more taxes and National Insurance contributions – not as a result of an increase imposed by an oppressive government, but because more people are employed there [and profits are higher]. The government therefore has more cash to fund public services; it has less need to borrow money and will not have to pay as much in social security benefits – in-work benefits will be unnecessary because working people will be receiving enough to put them above the threshold for that support, and fewer people will be claiming out-of-work benefits.

“The government can then pay off its debts and deficit more quickly, after which it can cut tax rates. This means everyone will have more money in their pockets – including employers, who can plough the extra cash back into the firm with infrastructure improvements and more employment.

“You see how this works?

“Contrast this with what happens when you employ somebody on the minimum wage, or abolish it.

“People on the absolute minimum do not feel valued. They consider their employers to be taking more than their fair share of the profits generated by the company where they all work together. They feel undervalued – and demeaned by the fact that they have to claim state benefits in order to survive. Their health may be put at risk, because they may find themselves having to work ridiculously long hours, just to make ends meet. Their work starts to suffer, and they may end up unemployed, either for health reasons or because the company is suffering (as a result of workers turning in substandard work).

“The company makes cutbacks. Its bosses don’t want to take a pay cut so they cut corners elsewhere. The workforce diminishes and the quality of the product suffers. In time, the firm’s contribution to the national economy dwindles – if it doesn’t go to the wall altogether. Its tax and National Insurance contribution plummets.

“The government finds itself paying in-work benefits for increasing numbers of people, and unemployment figures skyrocket. Employers and workers do not provide enough money in taxes and National Insurance to pay the bill for public services, so these are cut back and borrowing increases. The nation goes into a debt spiral.

“That is the current situation.

“Which of the above would you rather have?”

That remains the current situation, no matter what George Osborne may be saying today. The government would not be considering slashing the amount paid to ESA claimants if it didn’t consider the number of people claiming the benefit to be too high. We all know the number of people claiming in-work benefits has rocketed and that Osborne is facing a huge shortfall between the amount of tax he expected to receive this year and the actual amount. What is it – £5 billion? That’s not small change!

There have been huge arguments with right-wingers who have made spurious claims that employers can’t afford to pay more than the minimum wage – or that there is no incentive to do so.

This research provides an incentive to do so.

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Why would an early budget stop the habitual Tory pre-general election bribefest?

'For the privileged few': Anything George Osborne offers to the poor in next year's Budget statement will be removed after a Conservative government is returned to office.

‘For the privileged few’: Anything George Osborne offers to the poor in next year’s Budget statement will be removed after a Conservative government is returned to office.

It is hard to understand why the Liberal Democrats seem to think bringing forward the 2015 Budget from March to February would stop George Osborne from using it to try to bribe gullible or selfish voters with tax giveaways.

The Conservatives habitually try to buy votes with measures that appear generous at the time, only to put the squeeze on the electorate in some new way after securing an election victory.

Look at Nigel Lawson’s announcement that the base rate of Income Tax would drop from 29 per cent to 27 per cent in 1987. The Tories won a landslide and then imposed the Poll Tax on us all. It was a disaster for the UK’s lowest-paid.

According to the BBC, the Tories are saying a “flashy pre-election Budget” would “weaken the credibility of their central message of economic revival and fiscal rectitude”.

Vox Political readers will probably agree that talk about “fiscal rectitude” is more likely to come from the rectUM, where Tories are concerned.

The Liberal Democrats don’t believe a word of it – and after more than four years in coalition with the Conservatives, they should know!

The BBC report claims that Tory backbenchers want to increase the level of income a person earns before they start paying the 40 per cent rate of income tax, or raise the threshold for employees’ national insurance by more than inflation, to lure lower-paid people into thinking the Conservatives have had a change of heart and the brutality inflicted on the poor since May 2010 is over. That would be a foolish notion!

The Lib Dems know they would not be able to stop the Tories doing this. But a February budget would allow around six weeks between the Budget statement and the start of the general election campaign, in which they would be able to separate themselves from the Tories and expose the motivation behind any faux generosity in the Chancellor’s speech.

Of course, some Lib Dems have been discussing the collapse of the Coalition before the Budget is announced. This would make the Conservatives a minority government and it seems unlikely that they would be able to pass their Budget if the Liberal Democrats did not support it.

Let’s hope that happens. The Affordable Housing Bill would be a good opportunity to ram in the wedge.

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Why NHS charging is a zombie policy

http://youtu.be/e6ci9ROmTO8

Several political organisations (including, to Yr Obdt Srvt’s regret, Labour) have been talking up the possibility of imposing charges on the public for NHS services. Possibilities under discussion have included direct charging at the point of use or a new ‘NHS tax’. Nobody wants to mention that this means paying for the NHS twice (we already fund it with our taxes/NI contributions).

BBC Radio 4 recently ran a debate on NHS charging, on which one of the speakers was Dr Clive Peedell. This gentleman is a stalwart of the National Health Action Party, the political group founded to end the Coalition’s privatisation of healthcare by defeating the Conservatives and Liberal Democrats at election time.

He made many solid points – information that the public needed to hear. We know this because the presenter tried to shout him down while he was in full flow, and in the Tory-dominated BBC this is always a sure sign that a speaker is on the right track.

The YouTube clip (above) whittles down the debate to cover only Dr Peedell’s words, in which he states that:

  • It is a myth that charges can reduce demand for healthcare; this is a zombie policy.
  • If people start paying they expect more from the service, so you get people with wants, rather than needs.
  • The NHS has been chronically under-funded for decades – by £267 billion over 25 years.
  • It is become a fantastically efficient system and all the evidence suggests that progressive taxation is the fairest way to pay for healthcare.
  • Even so, there are efficiencies that can be made – the market system costs £10 billion per year in administration costs, and 10 per cent of the budget pays off venture capitalists who invested in costly PFI schemes.
  • Austerity increases demand on the healthcare system and reduces supply.
  • And healthcare spending stimulates economic growth so we should increase healthcare expenditure with money reclaimed from tax avoiders.

The clip is well worth playing.

After all, it isn’t often you hear anybody talking sensibly about the health service for nearly six minutes!

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