Charlotte Church: 'Austerity is not the only option'

[antone]

Not wrong, but WTC should only be scrapped if in conjunction with the imposition of a living wage.

 

Scrapping it wont cause Employers to immediately raise wages - they know full well that if employees were to walk out, they would be unable to claim benefits while searching for a new job, as they walked out of the previous one.

 

It would be a blinking game, and I doubt Employers would blink first.

 

Totally agree that WTC is a benefits handout for Employers, not Staff, and was arguing that point on a political forum.

 

Regarding a Living Wage, Employers will scream and wail and gnash their teeth, and shriek that hundreds of thousands of jobs will be lost, we're doomed, Doomed I tells ya!"

 

Except, they did the same for Minimum Wage didn't they, and their threats and Fretting never came to pass.

 

Agreed. And interestingly, just saw this:

 

http://www.theguardian.com/money/blog/2015/jul/04/firms-paying-poor-wages-benefit-cheats-tax-credits

 

But the solution is not, as we are likely to see on Wednesday, just to slash the entitlements. Instead we need a phased reduction of tax credits hand-in-hand with a phased major increase in the minimum wage. CitizensUK estimates that aligning the minimum wage with the living wage – £9.15 an hour in London and £7.85 for the rest of the UK – will reduce the need for in-work benefits by £6.7bn a year, which would make a massive dent in the £12bn reduction in welfare spending which the Conservatives say is necessary.

[unclebulgaria67]

If business was not avoiding tax, then we might be able to get to a sensible position. The problem with taxation is that it has become a political issue more than in the past. There is corporation tax competition globally, but also within the EU. It is allowed under EU law for companies to transfer UK profits to parts of their businesses within the EU, so they can pay less tax. Some EU countries wanted to look at changing the law so that full tax was paid in the country where the profit was made. The Tories have ruled this out, as they favour competition to bring down rates and think companies who operate globally should be able to transfer money from UK to invest elsewhere.

 

If companies are not paying an estimated £30 billion + that should really be due, it means more tax for people through payroll and indirectly. Governments don't like changing income tax rates, so they constantly tinker with indirect taxes.

 

Business does not want to pay higher wages, unless they are forced to through minimum wage legislation and then they will pass on the additional cost to consumers if they can. The tax credits were introduced as a subsidy to business and to provide minimum income for work, so people could function in the consumer world we are in. Government will get most of the tax credit back in the form of VAT on spending, people paying council tax, buying fuel for cars etc. The actual net cost of tax credits when you work how much they contribute back to government is probably not that much.

[antone]

Unclebulgaria, you may well be right, but note that I am not married to my position on this matter. If Tax Credits are indeed the best way to achieve an economic policy goal, well, I'll listen to that debate. My concern is that the recipients are, in effect, being smeared as scroungers and so on, when they are not the real beneficiaries of this system.

 

When it comes to the minimum wage and price rises being passed on to the consumer, does anyone know exactly what proportion of the final cost of typical consumer items is made up of labour costs? I saw a calculation somewhere while reading a NW debate about a proposed raise in Washington State, USA from $8 to about $10. It suggested that if the increased labour cost of, say, a Big Mac meal at McDonalds was passed on in its entirety it would result in a cost rise to the consumer of about 20 cents on a $6 meal.

[unclebulgaria67]

Depends on the trade involved, but usually labour and its connected costs would make up a small percentage of the sale price of goods or services. But it is variable, as social care for example would only charge a few pounds per hour, more than the cost of a care worker. In a high output environment or dealing with high value goods, the labour would be quite insignificant.