Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
Britons Wake Up To 'Worse-Off Wednesday' Share Comments (4)
7:17am UK, Wednesday April 06, 2011
Tadhg Enright, business reporter
Tax and welfare changes that come into effect today will cost British households £2.3bn this year, according to estimates by Capital Economics.
Although lower earning taxpayers will be better off in the 2011/12 tax year, today is being dubbed "Worse-off Wednesday" for higher earners who will see their incomes reduced by £500m at a time of rising inflation.
Low earners will enjoy an increase of £1,000 to the personal allowance so taxpayers can earn £7,475 before paying income tax.
About 1.7m people earning below £21,000 a year will be £250 better off.
However the benefits are offset for higher earners because the threshold at which they start paying tax at 40% is reduced from £37,400 to £35,000.
National Insurance contributions are also going up by 1% although there will be an increase the number of exempted low earners because of a rise in the threshold.
Capital Economics' UK Economist Vicky Redwood told Sky News: "I think it's pretty unambiguously bad for economic growth because these people (higher earners) spend a lot of their income.
"Therefore consumer demand is going to weaken and economic growth is going to weaken because consumer demand makes up two thirds of the economy."
These tax credit cuts could not have come at a worse time for families.
TUC General Secretary Brendan Barber
Linking increases in benefits to CPI inflation rather than RPI inflation - which includes housing costs - will also reduce social welfare payments by £1.8bn.
The budget cuts are forecast to reduce household incomes by 0.25% but the impact is compounded by above target inflation which last year caused the first decline in spending power since 1981.
The Bank of England has forecast that inflation will peak at 5% in 2011 and that will contribute to a reduction in the spending power of household incomes.
The Institute of Fiscal Studies expects that real household income will have fallen by 1.6% between 2008 and 2011.
Trade unions are also warning low income families to prepare for a shock as a three year freeze and other changes to Working Tax Credits come into effect.
The TUC has calculated that a couple earning £40,000 that pays £400 a week in childcare for two children will be £2,500 worse off over the next year.
And more cuts already planned for April 2012 will make matters even worse.
TUC General Secretary Brendan Barber said: "With wages failing to keep up with the cost of living and the VAT rise biting into household budgets, these tax credit cuts could not have come at a worse time for families."
Bookmark the story
Britons Wake Up To 'Worse-Off Wednesday'Bookmark story form
Add this to my favourites
Stumble Upon
Reddit
Digg
Delicious
Newsvine
Facebook
CANCEL Help
Bookmark the story
You can add this story to your favourites or submit it to a social bookmarking site so other people can see it.
Social bookmarking lets you save
Email the story
When you press "submit"
STORY TRACKER
If you want to track a story, you need to log in to the Sky News website.
A Sky News account will also allow you to comment on blogs and take part in online discussions.
Once you have logged in and you have tracked a story, by clicking on the red icon the updates will display in the highlighted panel.
Close
Your Comments
Sort comments by: Newest Oldest Recommended
Posted by: natty333 on April 6, 2011 7:43 AMwhat a miserable country we live in I think the politicians must really despise us I can't explain it they seem to be hitting the poorest and most vulnerable yet wander round the world giving millions trying to help their poor and vulnerable it makes no sense in any wayRecommend (3)Report this commentPermalinkPosted by: Doomdark on April 6, 2011 7:39 AMwhat a load of rubbish, if you cant live on 700 quid a week theres something the matter with you and getting a few quid taken off you because you earn more IS NOT going to make you destitute.
Try scraping by on minimum wage before twisting your bloody face about paying more tax.Recommend (5)Report this commentPermalinkPosted by: Not-Impressed on April 6, 2011 7:37 AMThat £650m Cameron gave away to Pakistan could of helped here.Recommend (5)Report this commentPermalinkPosted by: I-am-English-not-british on April 6, 2011 7:37 AMit all started with Thatchers by now pay later policy that was built to boost the banking sector.
Stop borrowing and they crumble. buy what you can afford not what you wantRecommend (2)Report this commentPermalink Add your comments
By posting a comment you are agreeing to abide by our Terms & Conditions.
To comment on this story you must be signed in. If you are not a member then you can sign up to our community now.
Sign InSign UpReport this commentEmail Story Form
Reason
Abusive, threatening or offensive Obscene or vulgar Irrelevant, off topic or spam Racist or sexist Unsuitable display name Other
Additional details (Optional)
Latest Blogs
KleinmanApr 5, 2011 7:00 PMExclusive: Ex-Tory Treasurer Raises...
Boulton & Co.Apr 5, 2011 2:57 PMMaking AV Sexy! Yes, Really!
Life of CrimeApr 5, 2011 12:59 AMSweeney Joins The 'Whole Lifers'
Kay BApr 4, 2011 12:04 AMPaws For Thought
Family AffairsApr 4, 2011 10:45 AMTouchline Dads Who Abuse Refs
The Weather GirlsApr 2, 2011 8:14 AMDriest March
Foreign MattersMar 23, 2011 1:11 PMEgypt - Like A Virgin (Again)
Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
Woe..there is a lot above there. But just to draw attention to the first bit, which is about lower earners being allowed to earn more from today. This is good news as its about time that the poorer paid got less of a tax kicking.
Although I always want to spit at the mention of his name...it looks like Nick Clegg and the Libdems may be responsible for this. This was one thing they said in their pre-election manifesto and it looks like they have managed to stick to it.
It seems fair that higher earners make up the shortfall. Its a socialist principle in a way. We need higher taxes for the upper echelons rather than a cutback in the social services.
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Brian
Copy and paste in all its glory...
now all you have to do is learn how to use the delete button when editing and previewing your post...
Marek
I think therefore I am (not a Tory supporter)
Sue Nicholas- Location: river
- Registered: 12 Mar 2008
- Posts: 6,025
Well I for one think its disgusting that people earning high wages have to pay so much tax .All my children are high earners and have worked hard to get where they are today .Weeks working away from home and long days of work .
My daughter only said at the weekend how my late husband and I struggled to give them Music lessons and a good education.
I have a modest home but a family to be proud of .
Tonight at the Council meeting no doubt one or two will make snidey remarks re living in posh River
If you own your own home any savings ,if the day ever comes a Nursing home is required my family will have to pay higher fees to cover for for those who have no savings etc
So go to school learn get a job work hard and you pay pay for those that the socialist call the under privelleged . .
Guest 649- Registered: 12 Mar 2008
- Posts: 14,118
I also think that the people earning more should not have to pay more in the way of income tax,The Uk need them but what will happen we will drive them away overseas,By earning more money means they will spend more in the UK and save it ,all goes in the same pot at the end of the day,unless they do go overseas,then what happens when the pot runs dry and it will.
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Sue
So as a socialist should I pay for your care home fee's (God forbid you ever need one) even though you have savings and own your own home that could be flogged off to go towards the cost?. Just so that you can pass on the dish dosh to your kids?.
As a socialist I believe in free health care and education for all regardless of circumstances. As a Tory you believe in everyone paying their own way in life...except that is when it applies to you and your care home bills. A bit hypocritical is it not?.
Marek
I think therefore I am (not a Tory supporter)
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Flat, simple and low taxes is the way forward to encourage work and the entrepeneurial spirit needed for growth. But first the amount of public spending must be brought down to under 30% of GDP - then we can see our economy flourish without slipping into a regular crisis.
That means a lot more cuts are needed than the government is going about and we will all have to be more self-dependant. The good news is that with the lower public spending and lower flatter taxes added to economic growth we will have the wherewithall to be more independent.
The more u earn the more tax you should pay seems fair to me .
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Except that it can actually reduce the revenuea that go to government.
Besides a flat tax results in those earning more paying more.
A taxable (after allowances) income of £10,000 at 20% tax means a £2,000 tax bill
A taxable (after allowances) income of £100,000 at 20% tax means a £20,000 tax bill
That is fair and it does not discourage hard works and economic growth - result more revenue for government overall.
I know many people who deliberately keep their income just below the 40% bracket. They do so in a number of ways, one by only working 3 days a week. If he worked 5 days a week he could ear a whole lot more and employ more people but wont do so because why should he when over 40% of the extra income he would get is taken in tax.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
The last socialist government we had (Callaghan) imposed a maximum income tax on earnings of 83%, with a further surcharge of 15% on investment income. Additionally there were exchange controls which prevented people taking their money out of the country.
Thatcher's government slashed the top rate, abolished the investment income surcharge and lifted exchange controls within months of taking office. Result: huge inflows of capital, stock markets soared, and the total tax take increased substantially.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 703- Registered: 30 Jul 2010
- Posts: 2,096
Marek,
The care/nursing home one is a minefield, particularly when trying to argue the cut off point when social care becomes nursing care and it qualifies to be paid by the state irresepctive of personal finances.
One advantage of being able to pay for your own care, as we know with several family members, is that you have the choice of where to go and the choice to leave if you're not happy with the place.
One point to argue in the case of free care for all is that those who have their own savings have already been taxed on it when they earned it, so forcing them to pay for their care is taxing their income twice.
I don't there will ever be a perfect system - except for my own personal choice which I've told me kids, stick me in a corner and keep me topped up with whiskey.
Jan Higgins
- Location: Dover
- Registered: 5 Jul 2010
- Posts: 13,883
What a shame the high earners are going to have to go and loose an extra small percentage of their earnings.
They might have to go without the odd evening out or even that second or third expensive holiday they were going to have, there are a lot out there that would like to afford either event.
To disgusted Sue from River
. A lot of us struggled to raise a family and give them the best we could afford and our children also have good jobs, that does not mean the tax I still have to pay should go to my high earning children or yours.
-----------------------------------------------------------------------
I try to be neutral and polite but it is hard and getting even more difficult at times.
-------------------------------------------------------------------
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Not sure what you are meaning by the last part of that final sentance Jan....
The problem is to maximise revenue for the government without damaging the economy. High taxes and complex taxes are damaging as does the government spending too high a proportion of GDP.
Brian Dixon- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
marek,still a novice at it,but grin and bear with me i will get it right soon.
