Naked pensioners
If ever there was a case for a government bail-out it is to
stop pensioners parading naked. What is it with people in Britain in the last few years and taking their clothes off - hardly a week passes without some new hilarious bunch of people stripping off for a charity calendar.
Labels: Pensions, Unpleastant British customs
The "pensions scandal"
I find some of the critcism of the government here strange, not in the grand scheme of things, as I tend to believe in tax incentives for saving. More, instead, my confusion is do with the normal economic views of those it is mainly coming from.
First, given the focus purely on the removal of the dividend tax credit and not other changes in the budget, it seems to imply a strange faith in the power of government to completely change behaviour on specific issues. The assumption is that when £5bn a year less comes from the government, £5bn a year less goes into saving for retirement. There is zero offsetting behaviour by individuals or companies. [1]
Second, the assumpton that pensions should gain large tax relief seems now to be universally held. Yet all the "flat tax" proposals I have seen have involved removing that relief, and putting pension saving (and income) on the same lines as any other. Thus given
tax relief currently is in the order of £20bn a year, this would mean a 'raid on pension funds' or a 'tax grab' of around £400bn[2].
[1] Maybe they bought property? Between 1997 and 2003 (latest data, I'm afraid) the value of private pension funds went from £1,164bn to £1,330bn (up? yes. And 2003 was the low point in the stock market so it'll be higher now). The value of housing rose from £1,100bn in 1996 to £3,300bn in 2006.
[2] But, I hear you cry, taxes would be lower, people would save more in different forms. Indeed, I imagine that is true, but it is an argument we are not allowed to consider, it seems.
Labels: Pensions
