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Save Our Savers calls for a suspension of tax on savings income
For the 30th month in a row, the Bank of England’s Monetary Policy Committee has kept base rate at the record low of 0.5%. Although tasked with keeping inflation at the Government’s target of 2%, inflation is over double that level and expected to go higher. With the price of so many essentials of everyday life climbing so high, many of us will feel that the real level of inflation is considerably higher than that.
Savers are suffering hugely as inflation eats away at their capital. Base rates have been below CPI inflation for almost three years. In the past year alone, inflation has reduced the buying power of our savings by something like £60 billion. We keep hearing from politicians about the importance of reducing our debt yet, despite talk of “cuts”, it is still increasing. For the Government, inflation is massively convenient, of course, as it eats away at the real value of our national debt – at the expense of savers.
The IMF pointed out this week that Britain has the highest debt and the lowest savings ratio of any of the G7 nations. And yet still we sleep-walk towards the precipice despite all-too-many recent examples of where financial incontinence can lead.
Enough is enough
Savers have borne the brunt of economic policy for too long. As if it were not bad enough that interest rates are at a record low and that inflation is eating away at our savings, on top of everything else savers have to pay income tax on the paltry interest they receive.
How can it possibly be ethically fair to levy tax when people are LOSING money?
After pleading unsuccessfully with the MPC to consider savers in their deliberations, the time has come for the Government to provide some relief.
Save Our Savers will be writing to the Chancellor to call for an immediate suspension of income tax on savings interest while base rate remains below inflation. It is scandalous that savers are not only losing money as a result of the MPC failing to do their job, but are also having to pay tax on those losses.
We are told that with consumer spending accounting for two-thirds of GDP, restoring public confidence is vital. The Daily Mail today reports that fewer than one in 10 Britons feel they are benefitting from low interest rates. This moratorium would put money back into savers’ pockets and boost consumer confidence. What’s more, it chimes with the thinking of David Cameron and George Osborne while they were in Opposition. In January 2009, the Prime Minister said he wanted to abolish income tax on all savings for those paying basic rate tax. The previous year the Chancellor said: “Savers and pensioners are the forgotten victims of Labour’s recession…They are innocent bystanders and it’s simply not good enough for the Government to walk on by…While the Prime Minister may have forgotten about Britain’s savers, the Conservatives have not. We will take action to help.”
The question is simple. Are they men of their word?