It is becoming more and more apparent that a growing number of people in the UK appear to be stuck in the benefits trap whereby their income would reduce if they were in full-time employment. Through no fault of their own they are stuck in a system which has been expanding and growing for many years and which is actually costing the UK taxpayer billions upon billions of pounds. So is the UK benefits system beyond repair?
Yesterday's revelation that HM Revenue and Customs inadvertently sent out the private financial details of 50,000 tax credit claimants is a major blow to not only HM Revenue and Customs but the confidence which consumers have in the system. This is not the first time that private details have been inadvertently leaked into the public domain although unfortunately it does appear in many cases that lessons have not been learned.
David Cameron is this evening under major pressure to amend his plans to increase capital gains tax from 18% to anywhere up to 50%. It is unclear whether at this point in time the coalition government is taking notice of Conservative backbenchers who are up in arms about the position taken up by the government regarding capital gains tax.
As a move toward some kind of financial tax within the EU continues to gain pace and momentum, with only the UK and French governments opposing the move at the moment, more and more people are wondering whether an EU financial tax would work. What are the upsides and what are the downsides to such a move?
The British Retail Consortium has issued a report today suggesting that an increase in UK VAT from 17.5% to 20% would potentially see the loss of 160,000 jobs and have a "long and deep lasting" effect on the economy. It is believed that the rumoured increase would also hit high street spending by around £4 billion which is money that retailers can ill afford to give away in the current economic environment.
The likely rise in capital gains tax from 18% to anywhere up to 50% is causing major problems for David Cameron and his new government. It is well known that a number of backbench Conservative MPs are growing ever more concerned that the introduction of higher taxes which would effectively punish the middle classes and could alienate the very voters who gave David Cameron the largest share of the popular vote. So why is David Cameron risking the future of his government?
John Redwood, the maverick Conservative MP, has today stepped up his campaign to ensure that David Cameron thinks long and hard before increasing the capital gains tax rate in the UK. He claims to have been "swamped by support " from MPs and the UK public who are firmly against an increase in capital gains tax with rumours it could be increased from 18% to as high as 50%.
The UK government is today under pressure from the Organisation for Economic Co-operation and Development (OECD) which believes that the UK government needs to put forward a strong and credible plan to tackle the UK budget deficit whilst also maintaining momentum in the economy and reducing the impact of inflation. No mean feat!
The Queen's speech yesterday saw a variety of different acts and comments which have caught the eye of many financial experts this morning. However, it is the absence of a timetable for political voting reform which many believe could undermine the coalition in the short to medium term. There is also talk that the Conservative party appears to be winning the tax debate with suggestions of "lower taxation" in the future.
George Osborne has today announced £6.2 billion in public-sector spending cuts across the UK with local councils set to bear the brunt of the investment reduction. It was revealed that local councils will receive around £2 billion less in the tax year 2010/11 with all areas of local council services hit hard.
