No tax on your savings? Save our Savers launch a kind-of campaign. Ish.

16 August 2011

crumpled letter

It’s tough to be a saver at the moment. Interest rates have languished at a measly 0.5% for two and a half years, meaning you are not going to get rich on your bank interest anytime soon. If this only affected those with pots of money in the bank, perhaps no-one would care, but those on fixed incomes, like pensioners, are also suffering and as a result, a new campaign is forging the way. With a letter.

That’s right. Imaginatively titled Save our Savers have written a letter to George suggesting he implement a temporary suspension of income tax on savings income.

Of course, this campaign will not actually bring the rate of interest offered on most bank or building society accounts above the rate of inflation (around 5%), which currently means savers are effectively losing money, but this doesn’t hinder the campaign one bit, knowing, as they do, that “it really sticks in the throat that the prudent members of society, who want to save for their future or who have to live off the savings they built up, are effectively having their money stolen.”

But dramatic spokesperson Simon Rose doesn’t stop there. “What is truly iniquitous, however, is that savers are not only losing money to the ravages of inflation, but also having to pay tax on their losses in the form of income tax on savings income. How can that possibly be fair?” he wonders aloud.

So, using all their skill and resource, Simon and his friend Jason have written a Strongly Worded Letter (SWL) to the Chancellor. You can read the SWL here.

The SWL makes much of David Cameron’s promises and oration before he became Prime Minister, clearly not realising that anything a politician says while in opposition can effectively be ignored once he or she has gained power. Quotations like “ Savers and pensioners are the forgotten victims… They are innocent bystanders and it's simply not good enough for the Government to walk on by” from December 2008 or  “While the Prime Minister may have forgotten about Britain’s savers, the Conservatives have not. We will take action to help” are all well and good, but although strong on rhetoric, the letter is remarkably lacking in any actual reasoned argument.

There is no suggestion of how much this will cost the Treasury, or how this cost will be met. How this would affect the Government-backed National Savings, or investment in ISAs. Those kind of pesky relevant details.

Simon finishes his plea by encouraging you to write to your MP to “explain how unfair it is that income tax should be levied on savings income when savers are losing so much of their capital.” I find many things in life unfair, taxing interest on savings probably not being my number one, and I severely doubt my MP is interested in any of them.

The SWL is signed by Simon Ford who is a “businessman with experiance in financial services and on-line retail” but clearly no experience with a spell check, and Jason Riddle “former Director of IT, accountant and project manager.” Who is an accountant.

Still, how can George ignore a letter crafted by two leading authorities on savings, income, taxation and the economy? Oh, wait...

TOPICS:   Banking   Economy

1 comment

  • Dick
    Doesn't the government want the economy to get moving again though? Which means that they need to get people spending. In other words, they don't want people to save too much, they want them to spend. If he encourages saving now, then it is the opposite of what the country needs. And if he allows savers to get their income tax free, why not let investors (property or stocks) get their income tax free too, as they are just saving in another way? Pensioners can live off their savings still. They can earn £9,940, or £10,090 if over 75, before they are taxed. If they are being taxed on their savings income, then they have a reasonable income already (whether from a pension or savings income) and must have a decent amount of savings if it is worth complaining about. If these are the prudent ones that have saved for their future, then no doubt they own their own house, and do not have to pay rent or mortgage. If they don't, then they are not the prudent ones. If inflation is above the interest rate, then they will need to dip into their savings. When inflation is less than the interest rate, it works the other way. However, their savings is just a number. If it goes down, it goes down. So long as they have enough money to see them till the end of their life, they need to stop whingeing.

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