18 pence in the pound goes on servicing government debt.
This cannot go unchallenged. Total government spending in 2013-14 was expected to be according to the 2013 budget:
That totals £720 billion.
Income was forecast to be:
That is £612 billion. The difference is £108 billion of borrowing.
Now note that the cost of servicing debt is interest of £51 billion. If this about 1/3 is paid straight back to the government as it owns about one third of all its own debt right now as a result of quantitative easing. That means the real cost is about £35 billion.
Now even if we say council tax, business rates and other income are not tax (although why is hard to work out; the pot works as a whole) there is still tax of £451 billion collected.
And let's be really generous and allow the gross interest cost, that's still only 11p in the pound. But with total income taken into account and the net cost of interest actually used it's just 5.7p in the pound.
There is no way on earth the UKIP claim can be justified by any reasonable use of data.
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UKIP statistics remind me of the old story of how drunks use lamp posts
more for support than illumination
And, like dogs, as something to pee on!
With all due respect Richard, when I tell you that the cost of the late payments of tax is the interest cost on the late payments, you tell me I am wrong as it has to be borrowed. Yes, but only once and then the cost is the interest charge on that.
UKIP is of course wrong and your numbers here are fully correct. I had missed the fact that the government indeed holds a big chuck of the debt through the BoE and hence only the net cost should be considered.
Same as each time I am asking myself the stupid question as to whether the police pays the full price of fuel, i.e. duty + VAT. Yes they do, but it doesn’t matter…
In the case of Police paying fuel duty, you are correct. But it’s not the case in other areas where public bodies are subject to taxation. Where tax avoidance strategies are available, public bodies with budgets to constrain often try to reduce the tax they pay (e.g. Vat mitigation, NIC strategies). Whilst the avoidance itself has no net cost, they pay professionals to advise them, and where private companies are part of the strategy there can be large costs to HMRC in investigating (they can also investigate the public bodies themselves). That’s before taking into account the ‘wasted’ effort of, in effect, one arm of the state trying to protect money from another.
It’s an interesting area, with no easy answers. But it’s not as simple as saying ‘it doesn’t matter’.
Local authority treasurers now seem to take pride in VAT avoidance
I took part in a debate with some last year
Lee, I thank you for correcting me. I love being wrong when I am utterly wrong, which is clearly the case.
When I said “it doesn’t matter”, I meant it bona fide in the context of the cop’s car driving by for catching criminals… I overlooked/naively ignored that public bodies would play the same games as the ugly Amazons of this world.
They basically try, with a given budget, to maximise the amounts they can allocate to either the quantum of services they deliver (good thing) or the bits they can keep for themselves (bad thing). Don’t forget that I come from a country where for times immemorial, we have known civil servants serving themselves very well indeed… I know for a fact that this is far less prevalent in your beautiful UK. Seriously, you should all be happy to live in a country where corruption and theft are so limited.
I wonder if anyone could clarify fro me (as I’m not very knowledgeable on the debt issue):
1)A third of it’s own debt is owned by itself -does this mean the treasury has borrowed from the bank of England?
2) Is the other borrowing from international banks such as IMF, BIS? if so, what logic governs the ration of proprietary borrowing to external.
I imagine this is rather complex but if anyone has a ready overview I’d be obliged
The third that is owned by the Bank of England is QE
The rest is largely owned by pension dnd other institutional funds; some by banks but not IMF etc