As you well know I'm sure, a large slice of government expenditure is pass-throughs. The tax receipts go straight out again in payments to pensioners, child benefits, disability benefits etc etc and a further large slice goes to the salaries and pensions of public servants (nurses, soldiers, teachers, street-sweepers); all that money goes straight back into the economy (taxed!) and is spent to go round again. Then there's interest payments on debt. The remainder goes on land, buildings, ships, aircraft, trains, H-bombs (purchases of materiel) and again the money goes back into the economy. If the money supply circulates with a faster velocity, that in effect increases it. One big problem with the 2008-9 crisis was that the velocity sharply reduced, leading to recession. If government expenditure is cut a lot, that circularly leads to a fall in tax revenues and the need for further cuts (the current situation in Greece).
To get back to the subject of tax on petrol & diesel. I object to paying the tax when the fuel is used for cutting my lawn or hedge-trimming rather than road use. There is red diesel for such use, why not an equivalent for petrol? Another thing. The Government is encouraging the ownership of electric vehicles, indeed, they even subsidise the purchase of said vehicles. What if, overnight, we all bought electric cars? The revenues from road fuel would plummet and they would have an even bigger budget deficit. This would not be tolerated by any Government. Once a tipping point was reached (more electric vehicles registered than petrol or diesel) they would move the goalposts. Here is what I think they would do. They would pass legislation that only allowed electric vehicles to be charged up using a particular type of connection which would be taxed at a higher rate than domestic electricity. Electric cars and charging point would have a 'special' plug and socket to prevent the 'ordinary' domestic supply to be used as a cheaper alternative. The fines for using the cheaper domestic supply would be draconian as they are for using red diesel in road-going vehicles. In short, although they are encouraging the use of electric vehicles, they simply cannot afford to allow the majority of the population to convert. James May has a theory that petrol vehicles including bikes eventually will go the way of steam trains in that they will be important for leisure and as a hobby or pastime but not for everyday transport. I tend to agree. All governments show little imagination when it comes to tax. Usually it's the same old targets, price/income inelastic, addictive or essential ie. booze, fags, petrol. For what its worth, they should tax chewing gum, fizzy drinks, fast food, polyester sportswear, trainers (unless they are being used for their proper purpose), reality TV shows, people who actually vote for said shows, ready meals and youths who have their underwear showing in public. It would clear the budget deficit overnight.
Interesting thread. The original post asked the question is higher fuel duty a deliberate policy to reduce demand and thereby make fuel more 'sustainable'. I think the answer is no, the government is desperate for cash and will raise any tax it thinks it can get away with. In the case of fuel duty it is merely convenient to disguise this as a 'green' tax. Increased taxation reduces economic activity because people are less inclined to graft when they know the government will take a bigger slice of whatever they produce. The government, as Pete points out, requires revenue to provide 'essential' services, although what exactly is 'essential' is open to interpretation. I am surprised no one has mentioned the deficit yet, the difference between what the government raises in tax and what it spends, currently running at about £120,000,000,000 per year. A quarter of what the goverment spends it borrows. Despite so called 'austerity' this figure is refusing to fall and total debt is rising as fast as it ever has done, government projections have been wildly optimistic and at the end of this parliament debt interest payments will be a major part of government expenditure. Stop spending and we are screwed, continue spending and we are screwed.
Yes. The government spends more on servicing the debt (interest) than it spends on defence at around £40bn each year. UK plc has maxxed out its credit card thanks to Blair & Brown and left taxpayers to pick up the bill.
Do you imagine the money spent on paying debt interest just disappears into nothing? It goes to the holders of the debt, and a lot of those are pension funds. So that money actually goes to pay the pensions of people who belong to funded pension schemes. What exactly is your problem with that?
The big mistake was relying upon 'growth' to keep on rising and thereby justifying ever increased spending. Growth was just so 20th Century.
Perhaps it would be of greater long-term value to the UK economy if pension funds invested in UK businesses (especially manufacturing) rather than government debt
If you think we are in the shit now, imagine where we would be if the current lot didnt form a coalition considering labours strategy at the time was to borrow our way out of it....... And now the same bunch criticize the coalition for borrowing what they do. Funny as Obama did exactly that and the us nearly went off the fiscal cliff very recently. Shocking.
But borrowing is still at Labour government levels. The tragedy is that the coalition is getting criticised for 'austerity' but not actually implementing 'austerity'. The impression I get is that survival is the name of the game.
I genuinely don't get this "people would work harder if they weren't faced with high taxation" thing that I see people mention. Really, I don't. Unless tax bands are 100% or over, you will always be better off by earning more money. We are nowhere near 100% income tax. As NIC is capped at a certain income, you can actually pay less NIC proportionally the more you earn, in some measure counteracting the higher tax you pay. The current upper rates of tax are 40% and 50% (which will soon be reduced to 45%). Are you saying that because your personal taxation rate tips into 40%, you won't take on that new order your business was going to fill, in case you had to pay more tax? Really? Or as a middle-manager in a bank, you are deliberately not going to achieve more than your agreed performance targets in case you get a bonus that tips you over into the next tax band. Yes? Or even, as chairman of BigBank PLC, you aren't going to bet the whole lot on some risky foreign income scam that will break the bank if it fails, in case it does all go tits up and you get a leaving bonus that will be taxed at 50%? /flippant I genuinely don't get it. To grow your own business, you have to invest things, some of which are tax-deductible like the stock you buy to later sell, etc, so no tax paid there. You need to invest more of your time, too, and some folks resent that some (or most) of this time is taxed, at various and increasing rates. Is it true that people can fine-tune their working lives to match their income to the current tax thresholds? Really? Please explain. And apologies for my part in global thread-drift.
You've heard the phrase 'I wouldn't get out of bed for that', that's what you are getting from some. I share your view, if there's more to be gained the go for it.
Before we all slit our wrists at debt levels, it has been much, much higher:- Thanks to UK National Debt - Current, Recent, Historical Charts Tables for info. You can see why the nation was grateful to Wellington for chasing off that dreadful French chappie!
we can bicker and disagree as much as we like, but its a simple fact that all of the issues being discussed and the financial situation that we are in are as a result of the money system that we currently use. Blaming one party or another is irrelevant. The economic crisis is a result of the banking system (not necessarily capitalism). As long as we have a money system based on interest there will never be enough money in supply to meet the debts. this means a few at the top prosper whilst the many prop up the system..this is common sense. In an interest based money system currency is constantly losing value-they call it inflation. As such, there will always be more losers than winners with many in a state of perpetual survival..the 'comfortably poor'. The creation of a new money system would dispel all of this financial rhetoric, semantics and jiggery pokery..everyone seems to ignore the obvious because thats 'hows it always been done'..when the banks were originally deregulated in the early part of the last century the rot well and truly set in. Get rid of an interest based money system, get rid of 99% of the financial crisis...
its up to us i guess... heres a thought...he starts explaining at about 2.20 https://www.youtube.com/watch?v=Q8G7x7rb4xk
This is hilarious, though the joke soon wears thin. It's about a bunch of ignorant, confused, obsessive, swivel-eyed lunatic know-nothings. Not going to waste any more time on it.
In my opinion, with all respect to the OP and other contributors, this whole thread is really a complete waste of time......... All the p*ssing about with taxation etc, by this and the previous Governments is simply shuffling deckchairs on The Titanic. The UK is no longer in contention to be a world leader and what we are seeing is the decline of the UK which is unstoppable The UK has just lost it's Triple A rating (which was on the cards a few years ago); we have a huge part of the population that are simply numpties; we have people in power that are lining their pockets off the backs of others, in preparation to leave the ship before it goes down; pensions are failing; old people are being bumped off; most of the population have lost faith in politicians and the police; we are very soon going to see an inability to generate electricity full-time; we are becoming reliant on other nations to supply energy, nations which we never have dreamed of relying on; food production in the UK is limited and we rely on imported 'stuff' from wherever we can get it; we don't actually produce much of anything in the UK anymore and we rely on employment in things like call centres - effectively (actually not that effective) answering services or middle men.....basically non-industry, or as I would prefer to describe it, ' fake' industry; immigration has brought about a violent change in culture which will increase in the very near future; none of the idiots at the top can get a grip on things because there is nothing left to get a grip on. If I was still young enough to emigrate, I bl**dy would and I wish I had done so years ago. AL
