Mr Brown Saving us 'Again'?

[TheAnimus]

BBC NEWS | Politics | I can save economy again - Brown

"I can steer this economy through difficult times."

"I have done it before and I can do it again," he told the BBC.

When exactly?

Honestly this prime minister dosen't seam to be living in the real world, he is making knee jerk reactions which are VERY bad to do at a time like this (ie increase our national debt, before we've even entered a recession).

Does anyone have any faith in this man?

[kalniel]

Less now that he seems willing to alter things as a result of media moaning.

I do think he has some great long term plans for the country, but he's in a tough situation - if he ignores the short term pain then the tories will get in and will end up reaping the rewards. If he panders to the short term then he kills the long term prudence that I like.

He needs to stick with the long term, but do a better job of convincing people not to fall for short term complaints, something the tories are getting rather good at manipulating. But I think that'd be a mamoth task even for the most charismatic of leaders. For brown... near impossible.

[TheAnimus]

What are these long term plans thou?

Buy Now, Pay Later. Thats the only one i've seen so far under him.

[Sinizter]

Absolutely no faith in any part of the current government....

[G4Z]

Absolutely no faith in any part of the current government....

QFT

I am 27 and I can't honestly say I have ever been happy with any government I gave known, they have all been far too right wing and authoritarian for me. This Nu-Labour government has been pretending to be a socialist one but then goes and does things like removing the 10p tax rate. I really wasn't sure about 'not flash just Gordon' Browns handling of the economy over the past decade to begin with. Yes we have had the longest period of sustained growth, but so has the whole world and we have grown behind the global average over that period. I also think he has made some real howler mistakes as well, such as selling half our gold reserves at a time when gold was at its lowest price as well as raiding our pension funds by taxing employers contributions. When this recession hits, how hard it hits will depend on the steps taken by the government over the last 10 years and as far as I can tell they have taken none and we are going to get hit hard.

[Saracen]

Absolutely no faith in any part of the current government....

I absolutely agree.

The problem is, I'm not sure any of the alternatives are likely to be any better. Our problem is that the government (and opposition) is full of politicians.

[Lee H]

I had to laugh at Gordon Brown squirming this morning after Sky News highlighted the fact 10 days ago he said he wouldn't do any knee-jerk reactions like increase the allowence before tax etc in order to calm the storm over the 10p tax fiasco.

10 days later... he's on TV getting a grilling as this was just the thing he has just done.

[mediaboy]

Meh.. he's not the most intelligent of people. And watching videos of him trying to debate points against the Tories leaves you no doubt whose the better politician.

But.. like Saracen said.. the alternatives aren't much better. Maybe when I'm rich and famous I'll just buy out all of England. After all... buying a country would mean I basically own it... then I could get rid of the government/occupants and have my own private country... ah - the fun!

I mean - it's not as if I can do much worse in running this country as the current government are.. and I'll be unlikely to contradict myself within a fortnight.

[Zadock]

I lost faith in this government when they took us to war in Iraq... but it still worries me what might happen if we end up with conservative government after the next general election. The tories are trying to do an old "nu-labour" thing now and come across all socialist themselves which is completely contrary to their grass roots. Is it jsut to win votes? probably, they were even saying the other day that their new stance/approach or whatever you want to call it makes them compatible with Lib dem voters Its all a bit fubar, I'm not sure which way I'll vote because they all seem to be full of some brown and smelly.

[TheAnimus]

I've yet to see any socalist ideals from the tories? To be honest i'd be very worried, generally speaking the more socalist you are, the worse your economy fairs during a depression.

The tories normally quite good at not taxing the poor, i think the problem is that labour are geniunly trying to be socailist, just that they've got god complex, they want to tax all of your money it would seam, then decide how much to give back to you. I really dont like that idea myself.

[Stringent]

We need a total change of government. Maybe the BNP wouldn't be a bad idea ...

How is that Jeremy Clarkson petition for PM going?

TBH, things go round in cycles. We have had a great time during the past decade or so, now things take a turn for the worst. I doubt there is much we can do, whoever is in charge. Oil is running out, therefore prices will shoot through the roof. We all need fuel to power our electronics, production plants etc, so their costs go up and pass onto consumer.

My advice, cut your costs now, sell anything that isn't a necessity and save the money.

[mediaboy]

surely we should be buying out necessities, monopolize the market THEN sell them.

Although it is against the law, it is a good way of getting people ot pay a premium price for something

[iranu]

Broon 1997-2006: Woohoo, look at me, the very model of prudence even though I've inherited a great position, but after 1999 I'm taxing you to buggery. Woohoo, no more boom and bust, look at me aren't I wonderful. Bow down in front of your economics guru and master. All hail Broon for my wonderful management of an economy growing on the back of the rest of the world.

Broon 2008: Nuffink to do wiv me guv, honest. Look it's all the fault of the US, totally out of my hands. All that cheap money that you've been gorging yourself on for the past decade was not my fault nor is it my fault that I've borrowed Billions and taxed you to the hilt in the good times only to blow it away on bureaucracy and have nothing except massive public debt when things get tough which is now.

So I'll cock up the 10p tax rate then try to bribe you all with £2.7Bn of borrowing which you will have to pay in order to rescue Labour ahead of a defeat in the up coming by-election. Woohoo, look at me, I'll lie about the bad times and me guiding you through them because lets face it the last decade has not had any bad times except when I sold gold off at it's lowest possible price. Yay I'm listening, I'm listening, but I've got my fingers in my ears and really the past decade was a charade. Yay. All hail me Mr Broon.

[schmunk]

N.B., before any more moaning about UK taxation occurs, please note that even now we are not a particularly highly-taxed nation.

Yes, if you compare the UK to the US, you will observe that we pay more in tax, because we do, as the US is one of the lowest taxed nations in the world (excepting the oil-rich states, etc.).

Instead, compare the UK to most European nations, and you'll soon see that we have a comparatively low level of taxation. A google image search for 'tax wedge' or 'tax burden' will get you some quick data.

I particularly like this table:



which is from the OECD, so trustworthy data. For all you downtrodden low-earners, have a look at the '67% of APW (Average production worker wage) figures.

The above data is from 2002/03, but is still representative today as , guess what, tax levels have hardly changed since then (a 1% increase in NI contributions in 2003/04, but then the previous changes to income tax and NI were a 1% decrease in basic rate tax as well as a significant increase to the minimum earnings liable to NI, both in 2000/01, so it's swings and roundabouts...)

[G4Z]

Does that take in to account things like, car tax, fuel tax and VAT?

I thought our total tax burden was closer to 50%

This article seems to suggest tax is 50% higher under labour when you take inflation into account.

Tax burden 'up 50% under Labour' - Yahoo! News UK

[Saracen]

.....


I particularly like this table:

.....

which is from the OECD, so trustworthy data.

Is it? Trustworthy, I mean?

Unless you have the basis for the collection of the data, that chart is totally meaningless. For instance, as G4Z points out, what taxes are included? If that only represents direct income taxes (income tax itself and NI), then as a data series, it has a specific value and use but would not represent the overall tax burden.

A google image search for 'tax wedge' or 'tax burden' will get you some quick data.

Yes ..... but what does "tax wedge" mean?

In relation to their data series on tax on the average worker, the OECD says

This series, taxes on a single average worker, measures the difference between the salary cost of a single average worker to their employer and the amount of disposable income (net wage) that the worker receives. This "tax wedge" represents the extent to which the tax system discourages employment.

In other words, income tax and NI, and moreover, it's a theorised rate not an actual one.

The OECD comments on that data series again

The information on the average worker's income level is supplied by the ministries of finance in all OECD countries and is based on national statistical surveys. The amount of taxes paid by the single worker is calculated by applying the tax laws of the country concerned. Thus, the tax rates are the result of a modeling exercise rather than direct observation of taxes actually paid.

Let's take that apart.

"supplied by the ministries of finance in all OECD countries" ..... so you're relying on data provided by finance ministries, who either might have a reason to slant data the way they want to, or might simply be using different methodologies in collecting it.

"is based on national statistical surveys" ..... so it's "survey" data not actual data.

"Thus, the tax rates are the result of a modelling exercise rather than direct observation of taxes actually paid" ..... so they've taken other people's data, collected by survey not direct actual data, and then applied a statistical modelling process to show an "average" worker.

What do they mean by "average"? Mean, median, mode? They're all averages, but can give VERY different impressions from an identical data series. Never, ever trust a politician who refers to an "average" something. It's a meaningless term and can be used to deliberately mislead.

Look at this data series : 1,1,1,2,3,3,1000000.

The mode is 1.
The median is 2.
The (arithmetic) mean is 142858.

So a politician could quite legitimately claim, if they were average daily wages (for instance) of seven people surveyed, that the average daily wage was £142,858. Or £1. Either would be true, and misleading.

Yes, I've grossly distorted that data series to make a point, and yes, the sample size is far too small. But if I were a politician, I could stand up and quite honestly make that statement. It's grossly misleading if actually supposed to be representative of virtually anything at all, but it's TRUE.


So, tell me again how those OECD figures can be relied upon to be "trustworthy"?

At best, they illustrate a theoretical point (the notional, mythical average worker), which is fair enough if you understand the point the figures are trying to make, and if you understand and can rely on those disparate nation survey techniques. But even then, given the data I was looking at was "Taxes on the average worker", direct from the OECD, they don't reflect overall taxes, just direct payroll taxes. And, as we all know, Gordon Brown has spent a decade keeping payroll taxes more or less static (with some reductions in income tax and some increases in NI), whilst furious taxing all sorts of other "hidden" things.


So, returning to my original point, without knowing exactly what that chart represents, it's totally meaningless.

If you shift, for instance, the tax base from direct (payroll) taxes to indirect (on spending) taxes, there is a social implication to that. Taxes on spending tend (with some exceptions) to impact heavily on the lowest paid, because a far higher proportion of their disposable income (post payroll taxes) goes on essentials.

If you earn £15,000 a year, what proportion of your disposable income goes on food, clothes, council tax (sorry, community charge), etc, compared to someone earning £50,000 a year, or £1,000,000 a year? Answer, probably a lot higher percentage. Community charge, for instance, bears only a nominal relationship with income, in that those with higher earners tend to live in bigger and more expensive homes and therefore pay more community charge. But it's far from a proportional relationship. And if you earn a lot, you're going to be spending money on different things (you might buy Rolex instead of Timex, and you might buy Armani instead of M&S or George. And you therefore have a far greater level of ability to cut spending (by switching away from Armani or Rolex) and you very likely have a far greater ability to impact on your tax burden by buying your Rolex in the US, or Dubai, or Hong Kong.

So .... if you take that data series an base it solely on some notional assessment of payroll taxes, you have also by direct effect, missed the social and general implications of the split between direct and indirect taxation, and the overall level of tax.

It's VERY difficult to do an accurate comparison of taxes in different countries. because of the very different structure of taxes, some of which are notionally optional, because they depend on expenditure. You mention the UK and US. Well, the UK has higher taxes in some ways than the US, but lower in others. Compare VAT to Sales tax and you see one picture. But compare community charge to property taxes and you see another. And then, compare the basis on which capital gains tax is charged, and you hit another problem. If you downsize in house and take a huge capital gain in the UK, you don't pay CGT on that if it's your principal private residence. So you could buy, improve and move up, get to a high level, sell, downsize and start again, and do it several times. But unless it's changed, you can only pull that downsizing stunt once in the US, so it's generally when the kids have flown the coup and you're downsizing to retire.

<EDIT> - Having made some enquiries about US CGT on houses, in turns out the US have changed that system. But that brings up yet another problem with international comparisons, which is that when one country changes the basis for collection, it can cause disparities in data over time.</EDIT>

And what about stamp duty? Is that a duty or a tax? Do you take it into account of not? Because if you buy a house and never move, you'll pay once. If you boing around from one house to another, it'll cost you a fortune .... in the UK.

Over the years, I've looked again and again, and am yet to come up with any international comparison of tax burdens that doesn't involve a fairly heavy degree of statistical assumption, and is therefore VERY suspect in drawing any direct comparisons, one way or the other.