What will happen with future tax policy to pay for the bail?
Discussion
Government borrowing up, government spending up, Benefit payments up vs. tax receipts down, vat down, stamp duty down & everything else down.
Now money printing has begun (or is about to) are we going to get
!) Hyper inflation
2) Hyper taxaxtion - 21%vat ( I hope so!), increased NI contributions
3) both of the above.
Quote from FT:
A dramatic deterioration in the public finances is expected to be revealed on Thursday morning as official figures show extremely weak tax revenues in the crucial month of January and lay bare the cost of the government’s capital injections into Britain’s banks.
The Treasury is bracing for investor disappointment given expectations for a cash surplus of £16bn for January, only £9bn worse than the bumper receipts in the same month last year.
But the government injected £17bn of capital into the Lloyds Banking Group alone last month, making those market predictions far too optimistic.
Stripping out one-off hits to the public purse, government revenues are also likely to be hit hard in January, since it is the month when income tax is traditionally boosted by bankers’ bonuses and corporation tax receives the fruits of financial sector profits. All of these tax receipts will reflect the credit crisis and the recession for the first time on Thursday.
In the last few months of 2008, tax revenues started to fall dramatically below forecasts and the deterioration has been so rapid that the January figure for public sector net borrowing runs the risk of showing no surplus for the first time since comparable statistics were published in 1993.
Much of the distress in government financing stems from the banking crisis that has decimated profitability in the sector, which contributed 25 per cent of corporate tax revenues in recent years.
But the partial nationalisation of some banks will also make a big difference to the government’s books. The Office for National Statistics is engaged in a process of assessing how much of the liabilities of these banks be counted as government debt.
It has already decided that the Royal Bank of Scotland, Northern Rock and Bradford & Bingley are, in effect, public corporations because the government has significant control over their operations. It is likely to make a similar determination on Lloyds Banking Group in the near future.
Now money printing has begun (or is about to) are we going to get
!) Hyper inflation
2) Hyper taxaxtion - 21%vat ( I hope so!), increased NI contributions
3) both of the above.
Quote from FT:
A dramatic deterioration in the public finances is expected to be revealed on Thursday morning as official figures show extremely weak tax revenues in the crucial month of January and lay bare the cost of the government’s capital injections into Britain’s banks.
The Treasury is bracing for investor disappointment given expectations for a cash surplus of £16bn for January, only £9bn worse than the bumper receipts in the same month last year.
But the government injected £17bn of capital into the Lloyds Banking Group alone last month, making those market predictions far too optimistic.
Stripping out one-off hits to the public purse, government revenues are also likely to be hit hard in January, since it is the month when income tax is traditionally boosted by bankers’ bonuses and corporation tax receives the fruits of financial sector profits. All of these tax receipts will reflect the credit crisis and the recession for the first time on Thursday.
In the last few months of 2008, tax revenues started to fall dramatically below forecasts and the deterioration has been so rapid that the January figure for public sector net borrowing runs the risk of showing no surplus for the first time since comparable statistics were published in 1993.
Much of the distress in government financing stems from the banking crisis that has decimated profitability in the sector, which contributed 25 per cent of corporate tax revenues in recent years.
But the partial nationalisation of some banks will also make a big difference to the government’s books. The Office for National Statistics is engaged in a process of assessing how much of the liabilities of these banks be counted as government debt.
It has already decided that the Royal Bank of Scotland, Northern Rock and Bradford & Bingley are, in effect, public corporations because the government has significant control over their operations. It is likely to make a similar determination on Lloyds Banking Group in the near future.
Figures released - Tax take for Jan down 45% YOY to £8.4bn. However, the really chilling bit is the last sentence in the article.
http://newsvote.bbc.co.uk/1/hi/business/7898871.st...
http://newsvote.bbc.co.uk/1/hi/business/7898871.st...
article said:
The Office of National Statistics, which releases the public finance figures, also said that it plans to incorporate the finances of the Royal Bank of Scotland (RBS) and Lloyds Banking Group into the public finance balance sheet.
It said this could add between £1tn and £1.5tn to public sector debt - between 70% and 100% of the UK's GDP.
Whoops.It said this could add between £1tn and £1.5tn to public sector debt - between 70% and 100% of the UK's GDP.
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