Shorfall In Tax Take Looming

[plasticpig]

Not really seen anything in the news about this recently. Fuel prices have fallen so much that based on 2013 figures where consumption was estimated at 34 billion liters the tax take from the duty on fuel will have fallen by £1.7 billion over a year. The tax take per liter has fallen by about 5p. Not a massive shortfall as it's just under 1/2% of the predicted tax take but it does beg the question of how the current and next government are going to fill it.

[Magog]

Will the falling fuel price have led to an increase in other economic activity that will boost the tax take elsewhere? And if so by how much?

[turbobloke]

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned.

[Magog]

turbobloke said:

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned borrows more than planned.

[turbobloke]

Magog said:

turbobloke said:

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned borrows more than planned.

There's the problem in a nutshell. Politicians telling people they can all have shiny things without the effort, skill or measured risks that are actually the precursors of earned shiny things, and even if in fact they can't get hold of the shiny things then it's all the fault of those other people over there --------> who put in skilled effort at risk and are now ready to be vilified then taxed even more. Large numbers of deluded individuals can repeatedly vote for this lunacy and from 1997- that's what they've been doing.

[smegmore]

The mansion tax will restore fiscal equilibrium come June.

[turbobloke]

smegmore said:

The mansion tax will restore fiscal equilibrium come June.

Saved!

[Grumfutock]

UK fuel sales have been dropping off since 2007 (by 3.5 Billion Ltrs 2007-2013) so these assumptions do not add up. As the price has fallen the volume sold has and will continue to increased. Fuel duty remains the same so it is only VAT that they are missing out on.

Some old links but they highlight my point well.

http://www.theaa.com/motoring_advice/news/fuel-sal...

http://www.govtoday.co.uk/transport-news/32-road/1...

[Axionknight]

I am surprised at this short fall, after all, many thousands of jobs have been created under our current coalition - surely the tax and N.I collected from these workers makes up for any short fall in fuel duty and VAT?

[turbobloke]

Axionknight said:

I am surprised at this short fall, after all, many thousands of jobs have been created under our current coalition - surely the tax and N.I collected from these workers makes up for any short fall in fuel duty and VAT?

Is there any reason why that may not be the case? Or at least, provided some offset?

[plasticpig]

turbobloke said:

Is there any reason why that may not be the case? Or at least, provided some offset?

Sadly not the case according to the OBR

[turbobloke]

plasticpig said:

turbobloke said:

Is there any reason why that may not be the case? Or at least, provided some offset?

Sadly not the case according to the OBR

Agreed, the tax-take target has been missed, but having read that article (quite quickly) there doesn't seem to be any absolute numbers for last year compared to this year with a projections through to April. It could be that not hitting the target is one thing, but the amount of tax taken is still higher and enough to offset the loss of fuel duty and VAT - offset not close equivalence was one of the two hopes above!

On a side note:

Article said:

Figures from HM Revenue & Customs show that of the growing number of people who work for themselves, 35% earn less than £10,000 a year.

In 2008, 20% of self-employed earned less than the prevailing tax-free allowance.

It's just possible that this is partly due to the phenomenon discussed occasionally on PH - including p/t employees plus semi-retired or retired folk keeping the brain going with self-employment, with more deciding it's not worth the candle to work for politicians rather than self and family, and keeping things small with income as a tax-free or low tax top-up.

[edh]

It's also due to bogus self employment among low earners - forced into it by their "employers". Allows them to pay less than NMW.

This is one of the factors reducing the income tax and ni receipts. Couple that with little or no earnings growth.

[Magog]

edh said:

It's also due to bogus self employment among low earners - forced into it by their "employers". Allows them to pay less than NMW.

This is one of the factors reducing the income tax and ni receipts. Couple that with little or no earnings growth.

Yep, employers can avoid all their NI contributions. Also self employed people are eligible for child/working tax credits, there are probably situations where someone would be better of working full time for very little money on a self employed basis rather than signing on.

[edh]

...and are "encouraged" to do so by DWP with the threat of sanctions..

[turbobloke]

Magog said:

edh said:

It's also due to bogus self employment among low earners - forced into it by their "employers". Allows them to pay less than NMW.

This is one of the factors reducing the income tax and ni receipts. Couple that with little or no earnings growth.

Yep, employers can avoid all their NI contributions. Also self employed people are eligible for child/working tax credits, there are probably situations where someone would be better of working full time for very little money on a self employed basis rather than signing on.

edh said:

...and are "encouraged" to do so by DWP with the threat of sanctions..

So it's just like people on zero hours contracts, who are forced to take the job? Only this time it's the self-employed and an axis of compulsion involving employers and the DWP. Scales are falling from eyes across PH.

The only thing is, nobody is forced to take any job, and nobody is forced to become self-employed, both are entirely matters of choice.

Even so there are other features in common. Where the self-employed earn less money, work more hours, and suffer more stress than employees, they still report greater overall job satisfaction (Pew Research Centre report on Social & Demographic Trends). How can this be so, with these poor coerced victims.

Strangely enough those on zero hours contracts report higher levels of overall job satisfaction than the average employee (CIPD report: Zero Hours Contracts, Myth and Reality). This report also showed that 18% of businesses pay hourly rates for zero hours staff that are higher than permanent employees compared to 11% that are lower. There's nothing in there about armies of bosses unlawfully paying below NMW.

Looking forward to the next instalment of poor bloody infantry doggerel.

Edited by turbobloke on Wednesday 28th January 09:51

[Tannedbaldhead]

Magog said:

turbobloke said:

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned borrows more than planned.

Govt spending is like a train in that it's very difficult to stop. One of the biggest problems is the amount of long term capital and outsourcing contracts with private companies providing public sector services. Once tied in to these contacts gauranteeing these service providers with set volumes of work there's no way out.
Cutting benefits isn't as easy as the govt hoped either. The problem is the vast majority of benefit spending is on retirement pensions. Rather than cutting these the govt has committed itself to raising pensions at 2%. Problem here is inflation is now so low the govt is increasing the largest component of the benefit budget at well above the rate in inflation.
In addition to this sickness benefits hadn't fallen anywhere near as much as hoped when ATOS screening programs discovered that the vast majority of those checked weren't swinging the lead as suspected but were genuinely ill or disabled.
Add to that the huge levels of in work benifit paid out to the low paid masses (I remember reading in an article a single supermarket recieves a subsidy of £900,000 per anum in the form of family tax credits) and `you can see why a govt can't just cut spending at will. It has no choice but to borrow.

[turbobloke]

Tannedbaldhead said:

Magog said:

turbobloke said:

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned borrows more than planned.

Govt spending is like a train in that it's very difficult to stop. One of the biggest problems is the amount of long term capital and outsourcing contracts with private companies providing public sector services. Once tied in to these contacts gauranteeing these service providers with set volumes of work there's no way out.

Spending isn't hand to mouth though, incredible as it may seem there is some planning ahead, so if there's a £1bn (say) shortfall in tax, and there's a project or two on the drawing board costing £1bn, cancel or delay the project(s) until the money is available. Rinse and repeat with the aim of living within means - ideally while telling voters they can't have shiny things they can't afford as taxpayers shouldn't be hit by having to fund ever-increasing handouts. This makes sense so it'll never happen.

[edh]

turbobloke said:

edh said:

...and are "encouraged" to do so by DWP with the threat of sanctions..

So it's just like people on zero hours contracts, who are forced to take the job? Only this time it's the self-employed and an axis of compulsion involving employers and the DWP. Scales are falling from eyes across PH.

The only thing is, nobody is forced to take any job, and nobody is forced to become self-employed, both are entirely matters of choice.

OK - Job centre person says - you have a car or drivers licence? Ok then you can become a self employed taxi driver / delivery driver etc.. There is a vacancy here.. Refuse the "opportunity" to work for £2-£3 an hour and you get sanctioned. That means everything stops, JSA, HB, CTR, everything.

Sure you have a choice...

[edh]

turbobloke said:

Tannedbaldhead said:

Magog said:

turbobloke said:

Apart from the fact that more fuel may well be bought at cheaper prices than a previous year with petrol and diesel both at a more extortionate price...

Government takes in less tax than planned, government spends less than planned borrows more than planned.

Govt spending is like a train in that it's very difficult to stop. One of the biggest problems is the amount of long term capital and outsourcing contracts with private companies providing public sector services. Once tied in to these contacts gauranteeing these service providers with set volumes of work there's no way out.

Spending isn't hand to mouth though, incredible as it may seem there is some planning ahead, so if there's a £1bn (say) shortfall in tax, and there's a project or two on the drawing board costing £1bn, cancel or delay the project(s) until the money is available. Rinse and repeat with the aim of living within means - ideally while telling voters they can't have shiny things they can't afford as taxpayers shouldn't be hit by having to fund ever-increasing handouts. This makes sense so it'll never happen.

This government has spent pretty much exactly what it forecast in 2010. Income is down on forecasts by over £50bn. They refuse to believe their "long term economic plan" isn't working. Just saying you have a plan doesn't mean that you have one.