Granny Tax Backlash....

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Granny Tax Backlash....

Post by Guest on Fri Mar 23, 2012 9:37 am

Granny tax backlash: Fury as full scale of Chancellor's raid on pensioners emergesAround 700,000 people turning 65 next year will be hit the hardest
The tax will take £3.5billion from more than 4.4million pensioners
Senior Tories say the move is the Chancellor's biggest blunder

By Tim Shipman and James Coney
PUBLISHED: 22:52, 22 March 2012 | UPDATED: 07:41, 23 March 2012
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The full extent of George Osborne’s stealth tax raid on pensioners was laid bare yesterday.
Around 700,000 people turning 65 next year will be hit the hardest – losing £323 annually with the end of age-related income allowances.
In all, the ‘granny tax’ will take £3.5billion from the pockets of more than 4.4million pensioners. Senior Tories have denounced it privately as the Chancellor’s biggest blunder.
Burden: Around 700,000 people turning 65 next year will be hit the hardest - losing £323 annually with the end of age-related income allowances
The new rules are so arbitrary that some OAPs will lose far more than others born a day before them.
Ros Altmann of Saga said: ‘Middle-class pensioners are outraged. My inbox is full of angry emails from those who did save for their future but are now hit.
‘The message of this Budget is, don’t bother to save for the future and if you’re too old to work any more you don’t count.’
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Pie tax wipes £30m off Greggs after Osborne's decision to put VAT on hot take-away food
I earn too little to pay 50p tax, claims Osborne (who owns a £3m home and a slice of family firm)
Soak-the-rich plans won't bring in as much as Chancellor thinks as it will stop them moving house, say experts
MAIL COMMENT: Chancellors cross the elderly at their peril
Half a million parents face red tape nightmare by being forced to fill out self-assessment tax forms to claim child benefit
RIGHTMINDS: The elderly are now being punished for being thrifty
RIGHTMINDS: The stealth attack on pensioners disguised as 'simplification'

The Institute for Fiscal Studies said the Chancellor should have given advance notice of his plan to freeze the £10,500 tax-free allowance for the over-65s.
Lord Tebbit described it as an assault on pensioners who have put money aside.
‘The freezing and gradual abolition of the age-related tax allowance is an error,’ said the Tory grandee. ‘It hurts those who have saved enough for modest pensions. It is unfair and lousy politics.’
Part of the justification for the move was the promise of a more generous state pension of around £140 a week.

But this is not expected to be introduced until 2016 – and even then only for those who hit pension age at the time.
That means that those who retired between these dates would lose both a higher allowance and the better pension – a double attack on their incomes.

This will affect around 2.8million pensioners – 700,000 a year for four years.

Existing pensioners are likely to be forced to see out their days living on the current state pension which, from April, will pay £107.45 a week.

Senior Tories have denounced the so-called Granny Tax privately as the Chancellor's biggest blunder
The IFS found that all pensioners with incomes of between £10,800 and £26,200 turning 65 next year would lose out on £323 as a result of the Budget. They will be part of the 4.4million to be punished, with average losses of £83.

Shadow Chancellor Ed Balls said: ‘The most unfair part of George Osborne’s tax raid on pensioners is the effect on people turning 65 next year.

‘How can it be right that someone born a day too late loses over £300 with little advance warning? Just as on his botched changes to child benefit, the Chancellor has simply not thought through the effect of his policies on ordinary people.

‘The poorest pensioners are not affected since they do not pay income tax and the richest pensioners do not get the allowance in any case.’

In Wednesday’s Budget statement, the Chancellor said no one would be out of pocket as a result of his changes since the tax allowance for the over-65s would be frozen rather than cut.

He boasted that it was an attempt to simplify the tax system.

But Paul Johnson of the IFS said Mr Osborne ‘should have avoided dressing up what is clearly a tax increase as merely a simplification’.

He suggested that, for the change to be presented as a reform rather than a tax hike, it should have been delayed until personal allowances reach £10,000 – expected to happen in 2014 or 2015.

But in a rare boost for the Chancellor, the IFS said there was a justification for making cuts on pensioners because they had done better than younger people from the Government’s austerity measures.

Mr Johnson said: ‘Our analysis shows that they have lost considerably less from recent tax and benefit changes than any other demographic group. And over the past decade and more pensioner incomes have risen faster than those of the working age population.

‘This looks like a relatively modest tax increase on a group hitherto well sheltered from tax and benefit changes.’

David Cameron dismissed claims that pensioners were going to be hit, calling it a ‘fair Budget for all our people’. Speaking to reporters in Bradford, the Prime Minister pointed to the future increases in the state pension.

‘The first thing is that every granny around the country is going to be benefiting from the biggest ever increase in the pension that comes in in April – an extra £5.30 a week.

‘And at the same time, the Budget also delivered a tax cut for 24million people in our country, and also we’ve now taken 2million of the lowest paid people out of tax altogether. It’s a good Budget for our economy and it’s a fair Budget for all our people.’

A Treasury spokesman said: ‘This is an important simplification. It’s sensible to have a single tax-free personal allowance for everyone.

‘The poorest half of pensioners will still pay no tax in 2013/14 and nobody will pay more tax in cash terms than they do today.

‘Compared to the plans the Government inherited, an existing pensioner with a full basic state pension will gain more from the triple lock in each of the next three years than they will lose from the age-related allowances freeze.’
Mr Cable said the major feature of yesterday’s Budget was the large increase in the personal tax allowance to £9,205 from April 2013. He said: ‘We are giving people the freedom to choose how to spend their own money, not taking it from them and then giving it back in a complex, means-tested system of tax credits.’

And defending the changes to pensioners’ tax allowances, Mr Cable said the Budget was transferring £1.7billion to pensioners –against £360million taken away by the allowances changes.

He said pensioners on lower incomes would benefit from the growing personal tax allowances under the simplified system, while increases in the basic state pension would give cash in real terms.

The Business Secretary said: ‘There is a small group of people, frankly my contemporaries, who have high retirement income and considerable asset wealth and it is right in principle they should pay a bit more. There is a group of people who are not wealthy, on not particularly high income, and who could be affected to a limited extent as a result of inflation eroding the value of the allowances. Those people will benefit enormously from the increase in the basic pension.’

Mr Cable accused Labour of failing to fix the state pension system, ensuring the value of the pension fell back further and further from incomes.

Mr Osborne stuck to a previous promise to increase the allowance to £10,500 for those aged 65, and £10,660 for the oldest pensioners. This meant the over-65s appeared to be gaining an extra tax break.

But what he didn’t make clear was that by freezing allowances after this, any pensioner who already pays tax will get only 80p for every £1 increase in their pension.

This is because the amount they can earn tax free will not change and, as a result, every extra pound in income above the allowance is taxed at the basic rate of 20 per cent.

http://www.dailymail.co.uk/news/article-2118993/Granny-tax-backlash-Fury-scale-Chancellors-raid-pensioners-emerges.html

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Re: Granny Tax Backlash....

Post by Guest on Fri Mar 23, 2012 10:33 am

As most of today's pensioners worked hard to build up this country during their lifetime with very few of them being layabouts and benefit scroungers, it is disgusting how the coalition government have decided to treat them so nastily and with disdain. The coalition prefer to waste our money on Foreign countries and supporting illegal immigrants in this country. Other cultures must be laughing at Britain now as we are the only country who do not value what our pensioners have done for their society.

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Re: Granny Tax Backlash....

Post by Guest on Tue Mar 27, 2012 3:15 pm

I can't help but feel that the Tories have done really badly on this. In order to introduce the Liberals pet projec of increasing tax allowances in general Osborne has truly taken his eye of the ball. You upset the blue rinse brigade with a huge degree of risk.

He should have harmionised rates later when it wouldn't have been perceived as costing the elederly anything.

The irony is Labour have been f--king the pensioners fopr years and now are pretending they are their friends. It will take some time to extricate the Tories from this shit and frankly I think it has been so badly handled we might have the spectre of the country going completely bust when Labour retakes thew reigns and bows to the unions.

I have never been a fan of coalitions but breifly thought it might be good. It has only been good for Labour who got us into this mess in the first place.


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