Sunak's Dilemma
Discussion
It's going to be an interesting Spring Statement.
The bulk of the inflationary pressures stem from energy, fuel and food which are all imported costs when GB has no ability whatsoever to exert any meaningful, prompt change. Pretty much the only tool available is to keep raising interest rates to ensure the GBP doesn't weaken and make that imported inflation higher.
Food is the big problem but the media and vocal populace tend to focus more on the least important element which is retail petrol prices. We have enormous elasticity in personal petrol consumption and it's one area of inflation where we can self mitigate the damage. Same with much of the inflation on domestic heating, we do have elasticity and can exert self control on excess consumption.
The big problem is that everyone wants a tax cut or handout to cover these costs which risks not being able to target those who genuinely need financial support.
Cutting fuel tax means everyone gets a handout when only those genuinely struggling need it and the U.K. as a whole must raise taxes to at least attempt to stem the tide of rampant borrowing.
Rather than blanket dropping taxes to appease the mob, I wonder if it wouldn't be more prudent to introduce a specific fuel and food benefit payment available to those genuinely in need along with a temporary raising of the tax free income limit rather than giving everyone a little bit of pocket money when most don't need it and wouldn't even notice such a small payment?
My guess is that everyone will get a little instead of a few getting a lot?
The bulk of the inflationary pressures stem from energy, fuel and food which are all imported costs when GB has no ability whatsoever to exert any meaningful, prompt change. Pretty much the only tool available is to keep raising interest rates to ensure the GBP doesn't weaken and make that imported inflation higher.
Food is the big problem but the media and vocal populace tend to focus more on the least important element which is retail petrol prices. We have enormous elasticity in personal petrol consumption and it's one area of inflation where we can self mitigate the damage. Same with much of the inflation on domestic heating, we do have elasticity and can exert self control on excess consumption.
The big problem is that everyone wants a tax cut or handout to cover these costs which risks not being able to target those who genuinely need financial support.
Cutting fuel tax means everyone gets a handout when only those genuinely struggling need it and the U.K. as a whole must raise taxes to at least attempt to stem the tide of rampant borrowing.
Rather than blanket dropping taxes to appease the mob, I wonder if it wouldn't be more prudent to introduce a specific fuel and food benefit payment available to those genuinely in need along with a temporary raising of the tax free income limit rather than giving everyone a little bit of pocket money when most don't need it and wouldn't even notice such a small payment?
My guess is that everyone will get a little instead of a few getting a lot?
DonkeyApple said:
The big problem is that everyone wants a tax cut or handout to cover these costs which risks not being able to target those who genuinely need financial support.
Cutting fuel tax means everyone gets a handout when only those genuinely struggling need it and the U.K. as a whole must raise taxes to at least attempt to stem the tide of rampant borrowing.
Rather than blanket dropping taxes to appease the mob, I wonder if it wouldn't be more prudent to introduce a specific fuel and food benefit payment available to those genuinely in need along with a temporary raising of the tax free income limit rather than giving everyone a little bit of pocket money when most don't need it and wouldn't even notice such a small payment?
My guess is that everyone will get a little instead of a few getting a lot?
Good post DA. As usual, your comments are accurate and perceptive. Cutting fuel tax means everyone gets a handout when only those genuinely struggling need it and the U.K. as a whole must raise taxes to at least attempt to stem the tide of rampant borrowing.
Rather than blanket dropping taxes to appease the mob, I wonder if it wouldn't be more prudent to introduce a specific fuel and food benefit payment available to those genuinely in need along with a temporary raising of the tax free income limit rather than giving everyone a little bit of pocket money when most don't need it and wouldn't even notice such a small payment?
My guess is that everyone will get a little instead of a few getting a lot?
However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
otherman said:
JeffreyD said:
How do we do that?
The government borrows money by issuing bonds. So don't borrow any more and as the existing ones mature and get paid back, the debt goes down. Only works if he can balance the books without new borrowing, which I doubt.2Btoo said:
Good post DA. As usual, your comments are accurate and perceptive.
However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
If the Government is going to take £10 less of our money I'd rather they took £10 less from those in need instead of £5 less from those in need and £5 less from me. Agree with a previous post that it is more complicated (and therefore costly) to implement.However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
Roman Rhodes said:
2Btoo said:
Good post DA. As usual, your comments are accurate and perceptive.
However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
If the Government is going to take £10 less of our money I'd rather they took £10 less from those in need instead of £5 less from those in need and £5 less from me. Agree with a previous post that it is more complicated (and therefore costly) to implement.However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
Thanks. Yes, that's one point of view. Others may disagree, which is the point that I am making.
2Btoo said:
Roman Rhodes said:
2Btoo said:
Good post DA. As usual, your comments are accurate and perceptive.
However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
If the Government is going to take £10 less of our money I'd rather they took £10 less from those in need instead of £5 less from those in need and £5 less from me. Agree with a previous post that it is more complicated (and therefore costly) to implement.However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
Thanks. Yes, that's one point of view. Others may disagree, which is the point that I am making.
I'm fed up with the media and backbench MPs of all flavours focusing on this being a 'cost of living' crisis, when in fact it is a far greater 'cost of doing business' crisis.
Businesses don't have any caps on their gas and electricity prices - the increases are already shocking. And businesses need to get their products or raw materials moved around, so the cost of diesel is critical. I operate a reasonably large fleet of trucks: fuel is up 50%, new trucks are up 20%, as are driver wages. And most of our work is contracted, so there's no-one to pass these increases onto. And from next month, the cost of diesel to operate our site plant goes up by 47p/litre too.
Household budgets are under pressure, I don't doubt that. But not nearly as much pressure as when businesses start failing and people lose their jobs. Keeping businesses employing people has to be critical.
Some above have said that cutting fuel duty gives everyone a handout, no matter whether they need it or not, or whether their journey is critical or discretionary. There is an easy way to support businesses though: hike VAT on diesel to 50% and then drop fuel duty by an equivalent amount so that the pump price stays the same. That way, the real cost to business falls, and pump fuel stays steady.
Businesses don't have any caps on their gas and electricity prices - the increases are already shocking. And businesses need to get their products or raw materials moved around, so the cost of diesel is critical. I operate a reasonably large fleet of trucks: fuel is up 50%, new trucks are up 20%, as are driver wages. And most of our work is contracted, so there's no-one to pass these increases onto. And from next month, the cost of diesel to operate our site plant goes up by 47p/litre too.
Household budgets are under pressure, I don't doubt that. But not nearly as much pressure as when businesses start failing and people lose their jobs. Keeping businesses employing people has to be critical.
Some above have said that cutting fuel duty gives everyone a handout, no matter whether they need it or not, or whether their journey is critical or discretionary. There is an easy way to support businesses though: hike VAT on diesel to 50% and then drop fuel duty by an equivalent amount so that the pump price stays the same. That way, the real cost to business falls, and pump fuel stays steady.
anonymous said:
[redacted]
There does seem to be validity in revisiting means testing of pensions. It doesn't have to be stringent but there is no shortage of pensioners who have genuinely zero need of it while plenty in dire need. Something like that could be packaged as need for those who can to help those who can't and you could possibly even consider offering an IHT relief commensurate with the surrendering of the state pension. Re fuel costs, I'd favour no tax reduction on retail use as its far more important to support haulage/delivery use so as to curtail its impact on consumer staples.
I believe core foods are already VAT exempt? Hence the whole thing about Jaffa Cakes being a biscuit not a cake so not VATable?
Increasing tax on coffee would be a punitive tax on trendy folk with beards who arguably should be taxed to crap until they understand that pissing all your money away on avocados and then complaining that you have no money is not social acceptable. But we should lower taxes on wine. Society can barely cope with the meteoric rise of the confused and angry pensioner. We don't want to encourage even more.
V8mate said:
I'm fed up with the media and backbench MPs of all flavours focusing on this being a 'cost of living' crisis, when in fact it is a far greater 'cost of doing business' crisis.
My thoughts exactly. By cutting taxes for "the poor" and lumping them onto business's you're not solving any problem. Prices will rise and the £10 a week "the poor" are saving in tax will be wiped out by the £20 a week increase in their outgoings. The cost of running a business is going through the roof and add in increased employer NI, corporation tax and energy bills which will have to be covered by increased prices.2Btoo said:
Good post DA. As usual, your comments are accurate and perceptive.
However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
I'm generally of the view that support should focus on the bottom groups. Those not at the bottom have choices that they can make. They can choose whether to spend or save. Everyone is not there to bail out those who chose to spend. There needs to be a return to personal accountability. However the second part of your post (quoted above) touches on the issue of who should be helped rather than what help could be available. Is it right that those who are contributing much much more to the public purse should be helped out less by that same purse? Or is it (as you suggest) that those at the bottom of the pile should be first in the queue when it comes to more handouts when they are already entirely dependant upon handouts?
I don't have any great wisdom to offer on that point, but it's worth picking it out as being different to Sunak's primary dilemma of how much money can he give away?
For me, the area to focus on is where people are working in low paid jobs where we categorically know that significant increases in the rise of essential items meeting with prolonged wage stagnation is going to risk imploding already fragile finances. I found it interesting this morning on the BBC that some workers when interviewed were making a clear distinction in their meaning of 'working class' that it meant workers on low wages as opposed to either a lifestyle or a group that included non workers.
It's clearly an extremely difficult time for many and I personally feel that this is a time when those who can get by do not hold their begging bowls out and those that are generally insulated have to do the morally correct thing and step up to support others.
No one likes paying more tax but the reality is that plenty can afford to pay more tax and we are currently in a moment of time where others must have not just their tax burden further reduced but receive more support. It's easy to give up a luxury purchase but no one should ever have to go without an essential purchase. The country is far too wealthy to tollerate what is not just more moral turpitude but genuinely not what the country is about.
It might be a good idea to look at changes over the years, and why this situation has developed.
Why "not working" is a viable option !!, it isn't in other countries.
A reduction in fuel tax would mainly benefit those commuting to work, not necessarily a bad thing if those are the people that the Gov will hit up for more taxes.
Maybe an independant body to look at benefits per household, not just per person.. When the disposable income is measured against that of a taxed working family it could be an eye opener..
Grey market income, should equal disqualification of benefits for a prolonged period, and fines. We often hear taxes should be fair, and that people should pay their fare share and targets those actually paying taxes, Let's re-evaluate fairness to not just a cliche.
,
OH, and a heavy tax on hoodies and sneakers
Why "not working" is a viable option !!, it isn't in other countries.
A reduction in fuel tax would mainly benefit those commuting to work, not necessarily a bad thing if those are the people that the Gov will hit up for more taxes.
Maybe an independant body to look at benefits per household, not just per person.. When the disposable income is measured against that of a taxed working family it could be an eye opener..
Grey market income, should equal disqualification of benefits for a prolonged period, and fines. We often hear taxes should be fair, and that people should pay their fare share and targets those actually paying taxes, Let's re-evaluate fairness to not just a cliche.
,
OH, and a heavy tax on hoodies and sneakers
CarCrazyDad said:
5P off is nothing
Needed 20P off.
£3 difference on a tank of fuel. Pointless.
Shouldn't really have been anything for retail fuel it was just a thing for the masses as they see the price of petrol everyday. Needed 20P off.
£3 difference on a tank of fuel. Pointless.
What they don't see is the cost of the price of petrol on everything else they buy.
The more sensible thing would have been to hold retail tax where is was and more than double the tax drop on haulage and delivery etc.
Food is re true problem.
DonkeyApple said:
I'm generally of the view that support should focus on the bottom groups. Those not at the bottom have choices that they can make. They can choose whether to spend or save. Everyone is not there to bail out those who chose to spend. There needs to be a return to personal accountability.
For me, the area to focus on is where people are working in low paid jobs where we categorically know that significant increases in the rise of essential items meeting with prolonged wage stagnation is going to risk imploding already fragile finances. I found it interesting this morning on the BBC that some workers when interviewed were making a clear distinction in their meaning of 'working class' that it meant workers on low wages as opposed to either a lifestyle or a group that included non workers.
It's clearly an extremely difficult time for many and I personally feel that this is a time when those who can get by do not hold their begging bowls out and those that are generally insulated have to do the morally correct thing and step up to support others.
No one likes paying more tax but the reality is that plenty can afford to pay more tax and we are currently in a moment of time where others must have not just their tax burden further reduced but receive more support. It's easy to give up a luxury purchase but no one should ever have to go without an essential purchase. The country is far too wealthy to tollerate what is not just more moral turpitude but genuinely not what the country is about.
And therein lies the debate. Who or what should be taxed to help others? Who or what should receive the support in the paying out of those higher taxes? What standard of living should be considered 'essential' and what is 'excessive'. For me, the area to focus on is where people are working in low paid jobs where we categorically know that significant increases in the rise of essential items meeting with prolonged wage stagnation is going to risk imploding already fragile finances. I found it interesting this morning on the BBC that some workers when interviewed were making a clear distinction in their meaning of 'working class' that it meant workers on low wages as opposed to either a lifestyle or a group that included non workers.
It's clearly an extremely difficult time for many and I personally feel that this is a time when those who can get by do not hold their begging bowls out and those that are generally insulated have to do the morally correct thing and step up to support others.
No one likes paying more tax but the reality is that plenty can afford to pay more tax and we are currently in a moment of time where others must have not just their tax burden further reduced but receive more support. It's easy to give up a luxury purchase but no one should ever have to go without an essential purchase. The country is far too wealthy to tollerate what is not just more moral turpitude but genuinely not what the country is about.
Your point about people at the bottom having little scope to make choices and cuts is a good one. However I genuinely believe that there is very little genuine poverty in the UK; having travelled fairly widely in the third world I have seen people who have little access to clean water and no access to health care; a situation which simply doesn't occur in the UK. There is a human tendancy to look at people who have more than you and consider yourself poor, but rarely to look at those with less than you and consider yourself wealthy (and in saying this I condemn myself.)
Whatever change is made will have one group praising it and another condemning it. 'Fair' is a term bandied around by both sides, with no defined meaning. Is it fair that some people can't afford the luxuries that others can? Is it fair that a well-paid city banker will pay more in tax in a year than another person may have income to live on? Is it fair that some people do no work and are entirely supported by the state? Is it fair that any tax cut will fall mainly to one (or another) sector of the population?
I do think that the tax and benefits system is labyrinthine to the point of absurdity. And simply administering such a system is a huge financial drag on the country in itself.
"Sunak's Dilemma" is a good title for this thread ....
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