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Sunday, 19 June 2011

Why bother voting Conservative?

Frankly, if the government carries this measure into legislation, nobody should bother.

"Discussions have begun at the Treasury over the move which would see the axing of tax relief currently paid out on pension contributions by people who pay income tax at the higher rates of 40 per cent and 50 per cent.
The money saved could go towards cutting the budget deficit or – in what would be a more politically popular decision – be used to provide a significant increase to the value of the basic state pension."

Income tax is a tax on income.  Sounds easy enough but you have to shout it really hard for some politicians to understand.  If a person doesn't receive an amount of income then they shouldn't be taxed on it.  If a person diverts 10% of their gross income into their employer's pension fund then they have effectively reduced their income for the year.  Sure enough they have also acquired the right to a future amount of income, but that right doesn't actually crystallise until retirement and the amounts actually received are fully taxable as they arise anyway (as income geddit), so why impose any earlier tax?

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