Austerity is the word we hear all the time now. Today maybe a quarter of a million marched in London to protest against Austerity and many in other cities. But what were these people really protesting about and asking for? Was it the reduction in Welfare payments or cuts in other services? Are people prepared to share the pain?
I think we all could agree that we cannot continue, either as an individual or a government, to spend more than we earn or, in the case of government, collect in taxes.
We as a country are borrowing a vast amount of money and as every day goes by we borrow more, for the purposes of discussion lets say £274,000,000 every day (£100bn/year).
When you look around the high street, you would not believe the country or the majority of the population were experiencing Austerity or being Austere in their approach.
So how do we solve the problem?
Now there are about 30 million workers in the UK so we could eliminate the borrowing by each paying an additional £12 per day in Tax (£4380/year). Very difficult and unlikely to achieve with average Salary of about £26000 and a large percentage of those 30MM people already receiving some financial support.
Or maybe UK companies could pay an additional Tax on their profits or pay increased salaries which would reduce the financial support required and increase tax revenue (total corporate profits currently running at about £1.100,000,000 per day). This could be achievable and still allow companies to make a reasonable profit but is likely to stem investment and employment.
Of course the other way is simply to reduce spending, again not easy to achieve.
Clearly a combination of the above is required to encourage employment and promote growth and demonstrate fairness to all in society.
None of the above tackles the amount we owe today (£1500BN), it just stops the debt increasing.
Goverment Spending plans for 2016 (copied from http://www.ukpublicrevenue.co.uk/)
Public Pensions £155 billion
National Health Care + £135 billion
State Education + £92 billion
Defence + £43 billion
Social Security + £112 billion
State Protection + £29 billion
Transport + £21 billion
General Government + £14 billion
Other Public Services + £88 billion
Public Sector Interest + £60 billion
Total Spending = £747 billion
Government Revenue National Local Total
Income and Capital Taxes 224.3 0.0 224.3
National Insurance 112.7 0.0 112.7
Indirect Taxes 253.3 28.0 281.3
Fees and Charges 0.0 0.0 0.0
Business and Other Revenue: 35.9 10.1 46.0
Balance 4.2 -1.1 3.1
Total Direct Revenue 630.4 37.0 667.4
No areas should be “ring fenced” to look for savings, there is waste in all activities and all waste should be eliminated.
Our low pay employment structures do not help, it stifles equipment investment because people are cheap and we buy imported goods because we do not want to invest in manufacturing equipment.
We have allowed major industries to disappear from the UK or ownership and manufacturing to go to offshore.
Our Utilities are owned by foreign companies who are able to charge UK consumers for infrastructure which benefits their manufacturing industries.
Our buildings and houses are owned by Foreigners and Investors which impact housing costs.
We need to get take action now but we need to be Fair whilst we go through the change from a welfare dependant (as George Osborne calls it) to salary dependant society.
We should all help eliminate the black economy and identify tax avoidance and only deal with registered companies/tradesmen.
Why not increase Income taxes, so those earning more pay more.
Why not consider an increase in VAT, so people who can afford to buy luxury items pay the extra tax.
As well as tackling the reliance on the welfare system and growing salaries to be seen to be fair to all.
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