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What Labour’s Tax Talk Really Means for Your Money · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Welcome to Maren Talks
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  Speaker 1: Your Money, the personal finance edition of Maren Talks Money.
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  Speaker 1: In these weekly episodes, we talk about the best strategies
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  Speaker 1: for making the most of your money. I'm Maren Sunset
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  Speaker 1: Web and with me senior aborter and Money Just Stilted
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  Speaker 1: author John Stape Hi John Hi, mel Okay, So this
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  Speaker 1: week we are talking well about what we often talk
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  Speaker 1: about now, not so much what we will do with
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  Speaker 1: our money, but what other people will do with our money.
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  Speaker 1: We're talking about potential tax rises and the other rumbling
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  Speaker 1: from the Chancellor in the Labor government from Liverpool this
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  Speaker 1: week where they are gathered at their annual conference. Making
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  Speaker 1: you feel positive about the future?
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  Speaker 2: John, No, No, and there shall we?
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  Speaker 1: Yeah.
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  Speaker 2: I think the thing I find most irriitating about this
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  Speaker 2: and I will try and avoid going on the rant.
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  Speaker 2: But really so this is all for people in the
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  Speaker 2: Labor Party. It's not for anyone outside and as such
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  Speaker 2: we have gathered absolutely no useful information whatsoever about what's
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  Speaker 2: going to be in the next budget from this particular weekend,
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  Speaker 2: and there is nowadays and for the most of my career,
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  Speaker 2: but particularly now there's just we too much that's futil
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  Speaker 2: pointless time waste and self aggrandizement in front of internal
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  Speaker 2: audiences and not enough actually thinking about what would make
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  Speaker 2: the country be better. And it ran over and we
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  Speaker 2: can talk about the actual practical realities.
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  Speaker 1: Although you say there weren't any, I mean there were
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  Speaker 1: a couple of a couple of things have come out, right,
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  Speaker 1: the idea there may be a more of a tax
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  Speaker 1: on gambling, and yeah, we can really disprove that not
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  Speaker 1: that will raise very much money. So it's not much
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  Speaker 1: of a solution to anything. But there's something and there's
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  Speaker 1: a sense that there is not going to be a
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  Speaker 1: standalone wealth tax of that unlined. So you know, but
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  Speaker 1: we know, don't we that the UK already has a
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  Speaker 1: lot of wealth taxes. IHT is a wealth tax, non
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  Speaker 1: index capital games which is how a capital game system
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  Speaker 1: works effrctally, tax on inflation that is a wealth tax.
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  Speaker 1: Stamp duty is wealth tax. Stamp duty on shared trading
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  Speaker 1: is a wealth tax. And that's not even on the wealthy,
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  Speaker 1: it's on everybody. Second highest transaction tax in the world.
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  Speaker 1: We've got a lot of wealth taxes already.
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  Speaker 2: Yeah, and one thing I will give credit to Rachel
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  Speaker 2: Reeves for it is that she had an interview with
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  Speaker 2: colleague Lezzie Budden yesterday and Rachel Reeves actually specifically said,
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  Speaker 2: we've already got taxes and the wealthy, and she explicitly
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  Speaker 2: mentioned her in tax and capital gains tax. So, I
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  Speaker 2: mean one thing, did.
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  Speaker 1: She mentioned the extra money you have to pay when
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  Speaker 1: you buy a luxury cars. So many stealth wealth taxes.
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  Speaker 2: She doesn't want people to remember that one for when
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  Speaker 2: she puts it up. I mean, I do think that's
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  Speaker 2: the problem. It's like they standalone what covers an awful
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  Speaker 2: tax on.
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  Speaker 1: Business class flights, that's wealth tax.
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  Speaker 2: I mean they could put extra bands on council tax
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  Speaker 2: is the that would be a wealth tax. Yeah, there's
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  Speaker 2: lots lotsay wealth tax they can do. You don't have
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  Speaker 2: to introduce the standalone one. And she tried. She had
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  Speaker 2: came to be faiture. She said, I think it would
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  Speaker 2: actually possibly be counterproductive.
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  Speaker 1: Okay, so she's beginning to understand the laugh Aca.
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  Speaker 2: Yeah. I mean, look, I think to an extent, Rachel
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  Speaker 2: Reeves's heart is in It's not in the right place,
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  Speaker 2: but it's no further away from the right place than
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  Speaker 2: lots of chancellors, but as with all chancellors, she's kind
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  Speaker 2: of roped in by kind of a her own stupid
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  Speaker 2: promises and be what she can get past her own backbenches.
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  Speaker 1: And past her for t I mean, I suspect the
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  Speaker 1: main reason for not having a wealth tax is because
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  Speaker 1: of the pension problem. So an overul of the UK's well,
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  Speaker 1: they'sh tied up in septs right, and defined contribution pensions.
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  Speaker 1: That's the type of you don't get a set amount
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  Speaker 1: every month, right, And if you were going to have
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  Speaker 1: a wealth tax, if it was going to have any
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  Speaker 1: efficacy and raising money at all, you'd have to address
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  Speaker 1: that vast amount of wealth health inside pensions. But if
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  Speaker 1: you were to suddenly say everyone has to give one
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  Speaker 1: percent of the money inside the defined contribution pension to
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  Speaker 1: the government, you run the problem of defined benefit pensions,
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  Speaker 1: which are mainly public sector and the holders of those
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  Speaker 1: types of pensions do not think of them as having
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  Speaker 1: a capital value. But if you would go after DC
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  Speaker 1: pensions our pensions, you would have to go after dB
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  Speaker 1: as well, and suddenly you would have to alert public
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  Speaker 1: sector pension holders of the actual value of their pensions
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  Speaker 1: and somehow tax arem on it in the same way
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  Speaker 1: you were taxing the rest of us. So that would
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  Speaker 1: open a can of worm so huge, so huge that
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  Speaker 1: I think in the UK were probably relatively safe from
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  Speaker 1: a standalone wealth tax indefinitely, which doesn't necessarily follow they
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  Speaker 1: won't be changes to the taxation around pensions, but just
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  Speaker 1: to say that a wealth tax would be unworkable in
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  Speaker 1: the UK because of this differentiate tax system between effectively
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  Speaker 1: the private and the public sectives.
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  Speaker 2: Yeah, and you're absolutely You've also exactly on why a
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  Speaker 2: lot of the things that always get mooted a pension
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  Speaker 2: reform before budgets come haven't happened when logically you think
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  Speaker 2: they should have, because this is the exact same reason
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  Speaker 2: that they won't touch tax relief, and why even the
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  Speaker 2: twenty five percent lump sum is. I'm not saying it's safe,
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  Speaker 2: but it's very difficult to touch because that does apply
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  Speaker 2: to the public sector as well, and no government, you know,
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  Speaker 2: Tory or Labor, wants to run into the fact that, well,
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  Speaker 2: then you're just going to get hit with the industrial
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  Speaker 2: action all over the place because people are going to
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  Speaker 2: perceive that as their pensions coming under fire. And where
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  Speaker 2: as you know, the private sector just but you just
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  Speaker 2: have to get on with it. The public sector won't
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  Speaker 2: take that line down, So I mean, that's one reason
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  Speaker 2: why I think a lot of the things that swirl
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  Speaker 2: about about pensions before these things, it would be a
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  Speaker 2: very big step. And the other problem is if you
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  Speaker 2: leave the public sector out, you don't use enough money,
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  Speaker 2: it doesn't make it worth it.
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  Speaker 1: Well, and you make us a really really cross. It's
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  Speaker 1: totally I mean, we're already furious about these different treatments
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  Speaker 1: of atensions between the public and the private sector, so
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  Speaker 1: you know, we could really we could get really cross.
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  Speaker 1: The other thing that has been mentioned is this idea
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  Speaker 1: that there will be no increase increase in headline rates
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  Speaker 1: of VAT. That's probably goes. The thing that hasn't really
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  Speaker 1: been talked about is the idea that the threshold for
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  Speaker 1: paying VAT if you have a small company you're a
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  Speaker 1: sole trader, which is currently reasonably high. I can't remember
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  Speaker 1: exactly what it did be, around eighty pounds of the moment,
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  Speaker 1: which means that you can, as a trades person or
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  Speaker 1: a small business owner, make a reasonable amount of revenue
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  Speaker 1: before you need to start down the path of admin. Hell,
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  Speaker 1: that is paying VAT, and there has been much talk
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  Speaker 1: about bringing that down to a much lower level, and
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  Speaker 1: the conversation there is about well, if you bring it,
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  Speaker 1: some people like to put it for it to be
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  Speaker 1: raised so that people could have a higher revenue before
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  Speaker 1: they hit VAT. But there is a certain amount of
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  Speaker 1: evidence of what happens is that people simply cap their
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  Speaker 1: income at the VAT limit because it's such held doing VAT.
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  Speaker 2: I've spoken to people have done that absolutely absolutely bathroom. Yeah,
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  Speaker 2: it's pretty stand on.
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  Speaker 1: But if you bring the limit right down, then no
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  Speaker 1: one's going to cant there income at fifteen thousand pounds
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  Speaker 1: or twenty thousand pounds or thirty thousand pounds, So you
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  Speaker 1: can change the dynamic there is if you take it off,
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  Speaker 1: people just cant there income at a high level. So
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  Speaker 1: that does seem like, yeah, possibility, don't you think.
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  Speaker 2: Well, think it's a possibility, and I I think it's
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  Speaker 2: quite probably more than a possibility. But I thankfully have
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  Speaker 2: never been in the possession, but I've needed to regist
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  Speaker 2: of VT so I cannot speak from experience. I mean mean, thankfully,
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  Speaker 2: it'd be marvelous.
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  Speaker 1: I have a business side any that much money. He's
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  Speaker 1: still on an entrepreneurial still on dynamics exactly.
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  Speaker 2: But I mean I do think there is an element well,
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  Speaker 2: you know, if people are genuinely capping the growth, they
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  Speaker 2: are either small businesses eighty five thousand so that they
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  Speaker 2: don't have to jump through the VT. Who then I
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  Speaker 2: mean there is definitely an argument for seeing we shouldn't
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  Speaker 2: have this huddle to people working to work harder and
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  Speaker 2: and more and expand their business. Whether the problem is
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  Speaker 2: that if you drop it to thirty, you immediately just
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  Speaker 2: crucify a hold of the businesses that will never go
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  Speaker 2: and to get it bigger. That's the flip side, and
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  Speaker 2: it's a whole.
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  Speaker 1: Load of you know, almost leveling down, isn't it let
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  Speaker 1: everybody feel the same a pain. And then of course
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  Speaker 1: is potential impact on inflation.
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  Speaker 2: Yeah, I and that is probably the one thing that
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  Speaker 2: may put her off it. I've seen somebody made that
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  Speaker 2: point the other day, and I think that would be
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  Speaker 2: the biggest huddle to doing that, I think is the
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  Speaker 2: fact that it would probably push up information.
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  Speaker 1: Because we're all buying a lot of products from well
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  Speaker 1: not all of us, but some of us might be
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  Speaker 1: buying a lot of product from small businesses on EDSY
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  Speaker 1: and this kind of thing which suddenly go okay, So
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  Speaker 1: maybe maybe not there anything else you picked up from
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  Speaker 1: her talking.
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  Speaker 2: I mean, but actually the main thing I would say
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  Speaker 2: is that so Friday on Fredy, the fiscal watchdog, the
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  Speaker 2: Office for Budget is Onsibility, gives its first sort of
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  Speaker 2: new forecast. One thing that's going to be important there.
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  Speaker 2: Everyone thinks it's going to write down productivity, and that
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  Speaker 2: means that Rachel Reeves will have an even bigger black
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  Speaker 2: hole we fill basically now that would be historic productivity.
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  Speaker 2: So the way I see that gives her or possibly
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  Speaker 2: her sort of semi rivals in number ten, the opportunity
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  Speaker 2: to say the manifesto was based on a false premise,
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  Speaker 2: a false view of the economy. We're going to wrap
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  Speaker 2: it up and actually we are going to you know,
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  Speaker 2: maybe ra's income tax, maybe raise national insurance. I mean,
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  Speaker 2: I think probably the idea about cutting national insurance but
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  Speaker 2: raising income tax by the same amount is something that
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  Speaker 2: they might consider, because that was an interesting proposition by
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  Speaker 2: their favorite think tank, the Resolution Foundation. What that would
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  Speaker 2: do is it means that workers don't pay any more tax, So,
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  Speaker 2: you know, the working people don't pay any more tax
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  Speaker 2: but retired people would. So basically, you kind of what
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  Speaker 2: you lose in the ni you gain and more reason
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  Speaker 2: and income.
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  Speaker 1: Taxes giving with one hand rather trouble lock taken back
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  Speaker 1: with the other.
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  Speaker 2: So I could see that happening or something like that.
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  Speaker 2: I mean, I did promise these. If if she's serious
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  Speaker 2: about getting the finances on a sustainable footing without actually
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  Speaker 2: cutting spending or doing anything they boost growth, then taxes
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  Speaker 2: have to go up a fair bit. And the only
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  Speaker 2: way to make taxes got a fair bit is to
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  Speaker 2: do something with the seventy percent of Like those three
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  Speaker 2: taxes raise the vast majority of income in this country
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  Speaker 2: or government tax in this country, So she has to
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  Speaker 2: do something. And to be honest, I mean, I don't
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  Speaker 2: really get why people think the manifesto was such a
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  Speaker 2: you know, every time I mentioned why do you all
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  Speaker 2: trust a manifesto? It's not worth the paper, it's kind
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  Speaker 2: of not printed on And people always come back and say, yeah,
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  Speaker 2: but if they do this, then they'll be open to
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  Speaker 2: accusations of this or that different. I mean, really, what
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  Speaker 2: you are? You are you nuts?
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  Speaker 1: You know? And at this point it much more unpopular.
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  Speaker 1: They get isn't really At the top.
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  Speaker 2: Of the Less and the manifest it was like a
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  Speaker 2: deal with Satan. It's like, it's going to stick to
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  Speaker 2: the letter to the law, but you're still going to
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  Speaker 2: get your soul at the end. You know, it's the
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  Speaker 2: same in this. It's like the government will stick to
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  Speaker 2: the letter of the law, but they're going to get
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  Speaker 2: your money in the end, so it's different. You know.
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  Speaker 1: What do you think about her about the idea that
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  Speaker 1: she's going to ambolish youth unemployment?
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  Speaker 2: Oh? I thought it was a lovely idea. I mean,
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  Speaker 2: there are so many ways you could have bolish youth on.
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  Speaker 1: The abolishing boom and bus, doesn't it. Yeah?
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  Speaker 2: Yeah, yes, and that one were Actually the timing of
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  Speaker 2: that one was interesting. I mean, I hope the time
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  Speaker 2: in the this one doesn't indicate anything but weird youth
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  Speaker 2: on employment is actually going to go, but I think
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  Speaker 2: it quite possibly could.
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  Speaker 1: Yeah, but I mean it does We've talked about this before,
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  Speaker 1: but it slightly comes under work for welfare, doesn't it,
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  Speaker 1: Which makes some sense for young unemployed people. They need experience,
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  Speaker 1: they need to be in the workplace if they're going
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  Speaker 1: to be paid benefits. It makes sense for them to
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  Speaker 1: give something back in exchange for it. Not everyone agree
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  Speaker 1: with this, but it does sort of make sense. The problem,
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  Speaker 1: of course, is just that the rising and I has
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  Speaker 1: killed so many of the type of hospitality jobs that
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  Speaker 1: the young would normally get.
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  Speaker 2: I mean, I guess, well, I guess is the problem.
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  Speaker 2: And it's kind of if that is what she's suggesting,
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  Speaker 2: and it's a good idea, we'd love to see what
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  Speaker 2: the rest they kind of leave up, faithful think of
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  Speaker 2: the idea of forcing people to do jobs in order
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  Speaker 2: to get their benefits, because that doesn't sound like they
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  Speaker 2: kind of hang that the left are traditionally fond of
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  Speaker 2: with us. But she's suggested then, yeah, I mean, it's been.
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  Speaker 1: To find out whether she means you have to go
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  Speaker 1: and effectively work fee for private companies or come help
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  Speaker 1: us clean up the streets. And it'll be interesting to
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  Speaker 1: see what she has in mind that.
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  Speaker 2: Right, Yeah, I mean, it could be great.
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  Speaker 1: It could be great.
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  Speaker 2: Do you know.
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  Speaker 1: I'm just going to end it there, because I don't
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  Speaker 1: think he said about anything else in this conversation today
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  Speaker 1: that it could be great. Everything else is awful. But
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  Speaker 1: you know, kids working for unemployment benefit that says John.
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  Speaker 2: Could be great expirational as rational.
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