This week, I have been annoyed by... taxes and savings

That'll be 1 penny for every pound you earn, but it's not income tax. No no no!

We are the taxmen who say.. NI!

So they just did the budget. 1% rise on income tax, sorry, National Insurance.

What's National Insurance? (In case you don't know.) In the UK, it's a state scheme where workers and employers contribute into a fund to pay for pensions, health service, unemployment benefit. (I say "contribute", they call it "contributions", but you don't get a choice in the matter. So it's really a tax.)

You much is paid depends on how much income you get. So it's a bit like an income tax.

So why not just call it an income tax? Maybe they should. Add the national insurance rate to the income tax rate and simplify matters?

They won't.

National Insurance remains a handy way to raise income tax without raising income tax and it also obfuscates the actual tax burden level. Employers contributions mean that "ordinary people" never even see some of the tax they are paying. (It's there, money employers set aside for wages, going to the inland revenue without even having it printed on your pay slip.)

But hang on, national insurance isn't paid on savings interest nor pension payments! Fine, but this is an incredibly inefficient way to go about it.

Savers can already make use of an ISA account to avoid taxes on interest. (More on this in a bit.) As for pensioners, if they are deemed to be worthy of paying income tax at all, they why shouldn't they pay tax at the same rate as the rest of us?

Savings

As previously touched upon, savers can use ISA accounts to avoid tax on savings interest.

Simple idea, out of your earnings (which you will have already paid income tax on) pay into a savings account. Once it's in there, no tax is paid on what happens to the money or when you come to withdraw it. (You'll probably have to pay VAT when you come to spend it though.)

Even so, this scheme needs rationalisation. You can have three Mini accounts (one cash, one shares, one insurance) or one Maxi account.

Errr, why? Why not allow people to open as many as they like in how ever many types they like? I'd like two share accounts, one a FTSE100 tracker and another self-select. Why is that so wrong? (I'm sure it's within the abilities of the Inland Revenue to check that I'm not going over my yearly allowance.)

Even the self-select ISA accounts have got into trouble for keeping too much cash, between when someone sells shares and buys different shares. What's wrong with that? Cash in a savings account, designed to hold a bit of cash? No no no!

Having said all that, a bigger problem for society at large is the lack of people making thier own savings. It's seen as a rich man's game only to many, especially if you bring shares in as well. Recent history shows that in the UK, there was a tax on "unearned income", that is, dividends on shares.

Having only been a nipper in the 1970's when such policies were in place, I was disheartened to see that the British people elected such an idiot. (That's not to say we have done better recently, but that's another rant.)

"Unearned income"? Just because it wasn't worked for directly, doesn't mean it wasn't earned. Would they rather we just spent all our spare cash on beer, and rely on the state to look after us when we stop working?

Oh, wait hang on...

Ideally, I would like to see maintaining a shares portfolio be as easy as buying a national lottery ticket, for the less well off of us.
"I'll have one pound worth of AnyCompany plc shares please."

But, the national lottery is sexy, whereas the stock market is too much of a risky gamble, so I don't think that will happen anytime soon. (If you didn't see any irony in that last sentence, all hope is lost.)

Mutter mutter grumble gruble...