VAT's not fair!

[Gob]

Chancellor George Osborne increased VAT from 17.5% to 20% and cut welfare spending as he moved "decisively" to tackle Britain's record debts.

Child benefit and public sector pay will be frozen and 25% cut from public service spending - but alcohol, tobacco and fuel will escape tax hikes.

Unveiling his first Budget to MPs, Mr Osborne said "tough but fair" action on debt was "unavoidable".

But Labour said it was "reckless" and would "throw people out of work".

http://news.bbc.co.uk/2/hi/politics/10371590.stm

Dear god...

[Reality Bytes]

It could have been a lot worse ...... and probably will be in the full autumn budget. The VAT rise may not actually ever get off the ground, if there's enough pressure against it between now and the autumn he might just call it off or reduce it as a bone to throw when the rest of his cuts and rises are announced in the big one.

I'm more concerned about what he's going to do to public sector pensions since we're about to start claiming hubby's within the next 2 years, at which point we'll also be looking to buy a house and there's now talk of the Bank of England being given powers to force mortgage companies to impose a minimum 20% deposit and a maximum borrowing age - both of which could prevent us from ever being able to buy our own home once hubbys military service is complete - nice eh?

[Gob]

Ouch, that's shite

What do you think he could hit public sector pensions with?

[Reality Bytes]

There's been all kinds of speculation ranging from capping the maximum pension you can get at some arbitrary level even if you've already earned a guaranteed figure (as we have) to increasing the age at which the pension becomes payable. Most feel that there will be a mixture of things including a cap, increased retirement age and increased cost to the worker by reducing the amount the employer pays in and upping the cost the employee pays in. As it is for public sector employees on a final salary scheme currently they have already been affected with the 2 year pay freeze which means their pensions are effectively now frozen at todays levels. I heard one Tory mp on the radio say that the "guaranteed" pensions would have that "guarantee" removed so for example if we were currently guaranteed to get a £6k a year pension but they set the cap at £4k we'd only get £4k despite the fact that we would have been planning our entire future based on the £6k figure.

If they start messing with the pension before we leave the forces it will directly impact upon our future prospects as we'll be one of the ones most adversely affected. It's the same whether you are a nurse, a teacher, a policeman or a fireman etc. every one over the age of 50 will have undoubtedly made financial decisions and plans based on knowing what their final pension figures are going to be. They claim it's to bring us in line with the private sector - but in the private sector if a pension scheme is failing to produce the income you need you have the option to top it up (if you can afford it) or switch schemes etc. We never had that ability and certainly won't be able to apply it retrospectively to try and increase it back to the original figure.

Unions are already making war plans - but forces, nurses, police etc all have a no strike agreement in their contracts which is partially why we have a decent pension scheme! If the government renege on that deal....

[Gob]

Jesus, I was tied into the NHS pension when I worked there, I wonder if it'll be worth say, more than four bob a week now?

Luckily certain investments have paid off for me, and the super scheme in Aus is very good.

If push comes to shove I'll have to live off Hen's pension.

[thestoat]

It really is crap - the UK finances are in such a bad state and we simply can't afford a lot of things we have been enjoying up until now. Of course, the county's debt is much smaller that the personal debt of its inhabitants.

[Reality Bytes]

The attacks on pensions are already starting, now they want to increase retirement age to 66 starting in 2016 which means thats hubby having to work an extra year, followed by the age for women being raised to the same which means I now face an extra 6 years working, and thats just the start as before we even reach age 66 they are looking at increasing it to aged 70 to justify this they cite that people are living longer so pensions are costing too much and claim the average lifespan of a UK male is 77 years - gee thats nice so after a working life of 54 years the average working class bloke can have 7 years retirement before death - how generous!

[thestoat]

the average working class bloke can have 7 years retirement before death

Don't be so classist The raising of retirement age isn't just for the working class.

There are a lot of people who his retirement age and are then forced out simply because of their age. That sort of rule is ridiculous, in my view, and one that is being overturned by the new government.

The bottom line is that people are living longer and the country can't afford to pay ever increasing pension bills to an ever increasing section of the public. It sucks and blows at the same time. I'd love to be able to retire tomorrow. But though these changes are unpopular - and I don't like them - I can't see any reasonable alternative.

And personally I don't see why women should be allowed to retire before men. But then, I have always seen women as equals ...

[Reality Bytes]

LOL @ classist indeed the rule affects all however those who can afford it and aren't reliant upon a state pension because of their ohhh massive bank bonus payouts for example will still retire whenever they feel like it whilst the peons who made their bonuses possible will still be working.

Like you I'm in favour of the removal of the forced retirement rule - it should be down to choice.

The problem with the bottom line being focussed on people living longer is that they appear to be overlooking the fact that if they force people to stay in work until they are 70 thats fewer jobs available for youngsters reaching working age who need those jobs vacated, so whilst they save on pensions it costs them in other benefits or increased education grants.

Moreover whilst people are living longer as people age then health increasingly factors into things so employers will be facing older employees probably with many years service so having contracted entitlements to sick pay and paid time off using those rights for treatments etc and forcing the employers to foot the bill and the increased workload covering for absent staff or go down the whole occupational welfare process to get them out - all of which takes time and money. If those are public service staff then the pension bill isn't affected in any way since the employee would go out with an enhanced dissabilty pension payable immediately, plus either an entitlement to state disability payments or since the government is making those harder to get they'll be at the job centre signing on looking for work at aged 65+ and in ill health - so hardly likely to find anything and thus still accessing state payments. Where is the saving? This is what I'm not getting I'm no economist but I cannot see the savings that these attacks are being sold to the voters under.

[rubato]

Are any items excluded from the VAT? Here essentials, like food, are not subject to sales tax.

yrs,
rubato

[rubato]

"...
The problem with the bottom line being focussed on people living longer is that they appear to be overlooking the fact that if they force people to stay in work until they are 70 thats fewer jobs available for youngsters reaching working age who need those jobs vacated, so whilst they save on pensions it costs them in other benefits or increased education grants.
... "

According to the press Britain is importing thousands of people to work in agriculture because there are so few people who want jobs.

yrs,
rubato

[Rick]

According to the press Britain is importing thousands of people to work in agriculture because there are so few people who want jobs.

The Hispanic population in Arkansas has increased significantly for the same reason...

[thestoat]

Are any items excluded from the VAT? Here essentials, like food, are not subject to sales tax

Yes, food is excluded. Also, books (I think) and baby clothes. Petrol isn't, and the funny (haha) thing is that the VAT applies to the fuel duty as well as the product. So we pay VAT on the tax we pay when we purchase fuel. Joy

[Lord Jim]

Actually, to clarify the record here...

In the US, sales taxes are a state matter. In California there is no sales tax on food. In other state's everything is covered by a sales tax; in still others you have a two tiered system with items like food taxed at a lower rate.

Also in some states, (like California) the state sets a sales tax rate, but then allows the localities to set a percentage above that for their own revenue.

[rubato]

Are any items excluded from the VAT? Here essentials, like food, are not subject to sales tax

Yes, food is excluded. Also, books (I think) and baby clothes. Petrol isn't, and the funny (haha) thing is that the VAT applies to the fuel duty as well as the product. So we pay VAT on the tax we pay when we purchase fuel. Joy

I'll have to check, but I believe that some of the states that have sales taxes apply them to the federal excise tax portion of fuel costs as well. Its not really unreasonable because when car mileage went up the revenue collected per mile driven decreased even though the total miles driven (and wear and tear on the roads) increased. Also, a flat amount per gallon does not adjust for inflation leading to chronic underfunding of roads.

Oregon is famous for no sales taxes.

yrs,
rubato