What with various incidents in the news and my upcoming annual bonus (strictly performance related) I’ve been thinking about tax of late. This is normally something I avoid thinking about as the numbers normally annoy me no end, and from the few years where I had to do self assessments the paper work is even worse.
With the Occupy crowd being forced to realise the difference between a right to protest and trespass, it was beholden on our glorious government to carry on with the Bank bashing. It seems that if your a bank keeping the law isn’t enough if the Government thinks you have money they’ll just change the law so that not only is it no longer legal but it wasn’t legal previously either, even though it was at the time. Just for a moment lets ignore the huge problems with retrospective changes to the law. Instead consider this we’re sort of wobbling along the edge of recession and the Government keeps talking about needing to encourage business to kick start the economy and all that, so what’s going to encourage business to set up shop in the UK more than grabbing half a billion from a bank for behaving in a completely legal fashion? Dear auntie Beeb describes this as an “unusual step”, personally I’d say it was both mental and obscene. If a company, or anyone for that matter, can’t be sure that taking a legal action won’t suddenly be deemed to have been illegal all along in future how can they plan any action? Nope the only sensible thing to do in that case is get the hell out of the country, or at least minimise your exposure to such retroactive muggings, we shouldn’t forget either that Barclays the victim of this tax time travel was one of the few banks which didn’t need a massive bail out. No point in mugging bailed out banks for our own money after all.
Now lets think about that whole kick starting the economy thing, now the obvious way to do this is for people to have more money to spend, after all that’s why they loaned banks money so they could lend it to businesses and people (making a tidy profit in the meantime) so that everyone spends more and the economy picks up and everyone’s happy and it’s all ginger beer and picnics again. At least that’s how I understand it’s meant to work, why they didn’t just give everyone a load of cash to spend directly I’ve no idea it’d have been far more popular, would have got the cash into circulation faster and huge chunks would have ended up in the banks anyway. Still I probably just don’t understand these things. What I do understand though is how much of my bonus the Government is going to take directly off me before I have a chance to do anything with it, now I’m in the upper tax band (apparently I’m affluent) so the Government’s going to grab 40% of it before I even get a sight of it. That remaining 60% I figure I can do one of three things with:
1) Pay of credit cards and such – banks get more money and can give it back to the government for that bail out and if not well they’ll pay tax on the profit from it, and the bank workers will pay tax on there wages etc. I’m not going to do that – far too sensible.
2) I could put it in the bank as savings pay tax on the interest it makes even as it loses value due to inflation and the Governments habit of printing money. Nope not going to do that either, not that stupid.
3) Be a good little citizen and spend it on random stuff. Yep that sounds good to me.
So I’m going to spend my 60% on random stuff, as it’s not going to be food or books, so that means I’ll be paying VAT (20%) which means the Government gets 52% of that bonus directly from my pocket, before I get a chance to swish it round the economy a bit. Of course it doesn’t stop there if I bothered to think about it the stuff I buy will have been moved around by lorries paying tax on fuel, vehicle excise duty, made by a company paying corporation tax, employees NIC and of course all the people invovled in making that stuff and getting it to me will have been taxed as well. At every step where money changes hands the Government is there for it’s piece of the action. So just maybe if the Government wanted to help everyone out and get that old economy kick started they could possibly take less money out of our pockets at the outset (things must be bad when even Labour are suggesting this) and just be comfortable that they’ll get it all back fairly quickly the moment we try to spend it? Who knows it might mean that those evil 1%ers would stop avoiding tax, why if that happened the tax take might even go up, and it’d help out the “working poor” quite a bit as well. Then the Government could rent even more Fig trees for their offices, and if the miracle of lower taxes all round happens perhaps we might yet get offered less Government.
