Tsk, tsk, naughty, naughty

(there’s a trope about Gordon Brown’s raids on pension funds, but the total cost of Brown’s dividend tax is about £5bn per year. The cost of the bankers’ crash of 2008 to pension funds is likely to be around £500bn,

Comparing the annual cost of a policy you support with the total cost of something you don\’t.

Tsk, tsk, biased or what?

6 thoughts on “Tsk, tsk, naughty, naughty”

  1. Surreptitious Evil

    And, given that this is “dumping on the Tories”, exactly which party were in government in 2008?

    The lefties seem to be succeeding in pushing the “Overton Window” to the extent that, by the next General Election, people will have forgotten “Gordon Brown, Saviour of the World” and the crash, the immediate response and the subsequent financial stagnation will all have been Osborne’s fault.

  2. But Tim, a tax you support is a benefit. Spending you don’t support is a cost.

    Tsk Tsk! Won’t you ever get this socialism thing right?!

  3. Is the cost of the tax only 5bn a year? Isn’t it 5bn in the first year, then 5bn + the return you would have got from the first 5bn in the second year, then 5bn + the return you would have got on the total cost from the second year in the third year, and so on?

  4. Matt is quite right but you also have to adjust for inflation to get the cost in today’s money – so it’s £7bn, then £7.35bn, then £7.72bn, then £8.1bn,…
    Secondly the £500bn is nonsense: at the end of 2006, very close to the market peak, pension funds owned £235bn of UK shares. [Source: ONS] How can the market crash (it has since recovered half of its temporary fall) have cost pension funds twice their total investment? The FTSE 100 is less than 20% below its peak, so if all the pension cashed in their chips today they would have lost a little less than £50bn NOT £500bn. They have lost a lot more from Gordon Brown’s tax raid.

  5. Matt: we can short-cut all of that. The standard assumption for calculations like this is a 5% yield. As a rough estimate, therefore, a one-off cost of £500bn makes us poorer by about £25bn a year.

    Whether £500bn is the right figure is, as John77 suggests, quite a different matter.

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