What a Drag

And How the British Should Free Themselves

IAIN HUNTER

I’m back on one of my favourite topics – Tax, specifically Income Tax. It’s a personal bête noire. Why are you whingeing, Iain, I hear you say, we all have to pay it don’t we? We’re all in the same boat, stop complaining.

Well, we’re not all in the same boat, as it happens. I saw that very clearly in the four years that I had my own limited company before it was struck down by the Convid scam. I had planned to operate for up to another eighteen months; its forced closure cost me a substantial six-figure sum.

I had employed the services of an accountant to set it up and deal with business and personal tax affairs. After twenty-seven years of being deeply into the Higher Rate band as an employee under PAYE and six years of being ensnared by the £100k trap since its inception, I became a basic rate taxpayer again simply by virtue of registering a limited company through which my professional services as an airline pilot simulator instructor and examiner could be contracted.

I had two other family members as directors and company secretary/IT consultant. The accountant advised arranging salaries and dividend payments so that no tax at 40% had to be paid despite our overall income being well over £100k, inclusive of pensions (This was done when I was between 65 and 69 years old).

It was amazing what could be offset against Corporation Tax too. I drove a lot of miles and the mileage rate for business use of my car generated enough mileage allowance over four years to finance a new car. All IT could be bought by the company – it became mine when I dissolved the company. The company even financed some private flying because I could legitimately claim that, as a retired pilot still instructing in flight simulators, I needed to keep in touch with some real flying.

There were several other little expenses and offsets, including an allowance for using a room in our house as an office, all of which served to reduce the Corporation Tax (CT) bill. The accountant’s charges were offset against CT too; they had proved to be excellent value at around £1,700 per year inclusive of VAT. There was even a flat rate 11% VAT arrangement to avoid having to fill in tedious claims for VAT refunds. It significantly reduced the amount of VAT paid overall.

Such advantages are not available to employees locked into PAYE. And it was all entirely legal.

I first moved up into the Higher Rate band of Income Tax in 1989, and, over the years, I developed a growing resentment of the structure of the Income Tax system in the United Kingdom as it affects both individuals and families. I’ve written about the unfair tax on marriage and the family before, so I don’t want to waste space on it here. Awareness of the assault on traditional family arrangements through the Income Tax codes is what kicked off my tax bugbear.

We all know the present Fabian regime lied to the British electorate in its manifesto when it pledged ‘not to raise taxes on working people’ – a phrase that leaves non-working people, such the retired, as fair game. What they have done instead is continue the policy of freezing Personal Tax Allowance (PTA) and the Higher Rate Threshold (HRT) which they inherited from the previous fake-conservative administration.

This means that as people’s income rises in line with inflation or more, they will pay more tax than they would have if the thresholds were also raised in line with inflation. Even if there is no change to the rate of Income Tax, people pay more tax, year on year. This is what is known as “Fiscal Drag” – people are stealthily dragged into paying tax, paying more, and some are dragged into the Higher Rate band. Even those whose only income is the State Pension will be dragged in. The concept of Fiscal Drag is not new; it has been around since the 1970s but it had been left alone for many years – until 2022 when the PTA and HRT were frozen at the 2021 level.

In her latest act of robbing industrious Peter to pay indolent Paul, Chancellor of the Exchequer Rachel Reaves has now extended the freeze on the PTA and the HRT until 2030 (isn’t it funny how that year seems to dominate everything). That’s going to be nine years of frozen tax thresholds before there is any relief for the long-suffering Income Tax payers of Britain so I thought I do some arithmetic to see what the effect will be.

The frozen PTA is £12,570; the HRT is £50,270 and the 45% Additional Rate threshold is £125,140. The inflation rates since 2021 have been:

2021 – 2.6%

2022 – 9.07%

2023 – 7.3%

2024 – 2.5%

2025 – 3.6% to date

This means that had the PTA risen in line with inflation it would today be, as a result of the budget, standing at £16,030 rounded to the nearest £10. The effect is that Basic Rate (BR) taxpayers will pay £692 more in Income Tax in a year than they would have if the PTA had risen in line with inflation. For Higher Rate (HR) taxpayers (like me) that figure is £1,384.

Given the incompetence, or is that Marxist malevolence, of the Chancellor of the Exchequer and the Bank of England Monetary Policy Committee, there is no reason to suppose that inflation will be less than 3.6% between now and 2030. By that date, the PTA should have risen in line with inflation (let’s be kind, an average of 3.6% per annum) to £19,130 meaning that a BR taxpayer will be paying £1,312 more in Income Tax, an HR taxpayer (like me) £2,624 more. And that is without any pay or pension rises.

The average UK salary is £38,100, inclusive of a 4.3% increase over 2024. If we assume that it increases at the same rate to 2030, the average salary will be £47,027 in 2030, bringing it to just over £3,000 below the HRT. If there is no change to the HRT, by 2032 the average salary earner will be into the 40% tax bracket. Likewise, the £100k point at which an Income Tax payer starts to lose the PTA, will bear down on the higher earners, dragging more and more of them into paying a marginal tax rate of 62%. Extra pension contributions can be made to avoid this, but that means restrictions on expenditure and other saving and investment. Alternatively, people affected could simply choose to work less. Many do already.

Such is the level of brazen state-sponsored theft and associated disincentives that now pertain in Britain. What I would like to know is why no personal finance journalist in the legacy media is doing these simple sums and raising even a peep of protest?

Will normal service be resumed in 2030 and if so, will the PTA be raised to anywhere near the £19,000 which, by then, it should be? I seriously doubt it. It may go up a little bit, and I couldn’t possibly hazard a guess as to how much, but it won’t be anything like £19,000. In this way, the Chancellor of the exchequer, whoever that may be by then, will have locked in a permanent increase in tax take by supressing the PTA and the HRT. The real slap in the face will be if it is raised only by the inflation rate that pertains at the time.

However, a lot of water must flow down the nation’s lavatory pans before we get there; if all the various economic and financial pundits are right, there will have been a major financial crisis of such epoch-defining proportions that it will make 2007/08 look like a teddy bears’ picnic. Although the thought is scary, there are always opportunities which present themselves at such times. That could be just the impetus we need to bin Central Bank debt-based fiat currency for good and replace it with sovereign treasury money (a new Bradbury Pound) which will be both debt-free and interest free. It would be backed by the gross wealth of the nation, and such is the amount of money that could be created by the treasury that the national debt could be repaid, never to be seen again.

What would we do with Income Tax in those circumstances? The link between central banks and income tax is clear. In 1697, the Bank of England was created. In 1799, Income Tax was introduced temporarily after a decent waiting period of 100 years and permanently in 1842. The Americans were not so tardy. They got the Federal Reserve system in 1913 and Federal income tax permanently shortly thereafter. Wherever in the world one looks, the establishment of a central bank with the power to create money and issue it as debt is always followed by the commencement of income tax. In Germany, the Reichsbank was created in 1876 and income tax followed in 1891. The Swiss central bank was created in 1906; income tax followed in 1916. There will have been a copy-cat element to be sure, but the trend is clear. So, get rid of central banks and their debt-based currency and we can get rid of Income Tax.

Are we all clear that the banking cartel controls Western governments? Are we all clear that tax is not raised to provide funds for government expenditure which will benefit the British people? Tax is raised in order to supress the population financially and economically. Note that even tax cutting governments have never really taken an axe to the state, let alone a chainsaw. The taxes are just trimmed, never cut completely. That’s because they are raised at the behest of the banking cartel to take money out of private circulation and redirect it to favoured corporations in the form of government contracts or to spend on its geopolitical obsessions. They think of an excuse to raise taxes, they raise them, then they find something to spend them on. The worst, most immoral, aspect is the level of state borrowing which commits people not yet born to paying future taxes to meet the debt repayments.

Whatever financial system we have when we kick the commies out, in reality we will still have to pay for defence, law and order, infrastructure, education, energy, health and a skeleton social security net. A future government of national recovery, after repealing all the pernicious legislation we’d like to see gone and cutting government to the bone, will still have to work out how to pay for everything. It may be that tariffs on trade and direct transaction taxes will be enough, but it may not and some form of income tax will still be needed simply because even a dramatically slimmed down state will still be much larger than the one that existed before 1799.

Reform UK has suggested that the Income Tax threshold should be £20,000 but as we’ve seen what it should be by 2029/2030 that figure already looks out of date. I can’t recall them saying anything about the HRT, the £100k trap and the Additional Rate. I’d suggest the PTA should be set at the income level which is required for an individual’s basic existence – rent or mortgage, utility bills, food, travel to and from work with some allowance for clothing and leisure activity. All that will have to be calculated. I have no-idea what the figure would be but a feeling in the water would put it in the region of £30,000- £35,000. Let’s say £32,500. The PTA will be that figure and above that the tax rate will be flat, say 10%. A replacement simplified Income Tax code will then be:

· PTA – £32,500.

· Rate – 10% flat rate or whatever low flat rate is required.

· The PTA to be fully and/or partially transferable between spouses and civil partners so mothers can stay at home if they wish to raise children if it suits a couple financially.

· The tax offset benefits available to the self-employed and limited company directors will also be available to employees.

What could be simpler? If all that were to happen, the sense of freedom would be palpable, the nation’s economy would take off and, released from the burden of an overweening government, enterprise and affluence would spread. A welcome bonus would be that Inheritance Tax and Stamp Duty on land and property transactions could be abolished. It truly would be a Great Reset, but one which favoured the people and not the banksters. They would be out of the picture for good.

---

This article (What a Drag) was created and published by Iain Hunter and is republished here under “Fair Use”

••••

The Liberty Beacon Project is now expanding at a near exponential rate, and for this we are grateful and excited! But we must also be practical. For 7 years we have not asked for any donations, and have built this project with our own funds as we grew. We are now experiencing ever increasing growing pains due to the large number of websites and projects we represent. So we have just installed donation buttons on our websites and ask that you consider this when you visit them. Nothing is too small. We thank you for all your support and your considerations … (TLB)

••••

Comment Policy: As a privately owned web site, we reserve the right to remove comments that contain spam, advertising, vulgarity, threats of violence, racism, or personal/abusive attacks on other users. This also applies to trolling, the use of more than one alias, or just intentional mischief. Enforcement of this policy is at the discretion of this websites administrators. Repeat offenders may be blocked or permanently banned without prior warning.

••••

Disclaimer: TLB websites contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, health, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.

••••

Disclaimer: The information and opinions shared are for informational purposes only including, but not limited to, text, graphics, images and other material are not intended as medical advice or instruction. Nothing mentioned is intended to be a substitute for professional medical advice, diagnosis or treatment.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of The Liberty Beacon Project.