Pay now, avoid debt later

Personal debt. National debt. Upcoming ghost-of-Christmas-future debt. Gen Y is almost completely unfamiliar to the concept of a debt-free society, and I’m pretty sure this will perpetrate for generations to come unless something drastically changes.

Everyone seems to have an opinion on who got us here and who’s responsible for getting us out. The latest establishment offering their (somewhat more than) two-cents’ worth is the National Institute for Economic and Social Research (NIESR), whose recent report predicted that income tax might have to be increased by 7p if the UK’s economy is to stand a chance at full revival.

The report stated: “The UK faces a structural budget deficit of 6 per cent of GDP. The build-up of government debt, which may reach 93 per cent of GDP by 2015, will leave a burden for our descendants.”

A rise in income tax has never been a particularly popular option historically (particularly around election time), and it’s unlikely to be now. Nobody likes the thought of more money deducted from their payslip each month without any tangible proof of where it’s going.

Even the BBC’s highest earners are setting up their own companies to avoid paying hefty taxes on their burgeoning salaries as they take on ‘freelance engagements’. I’m not condoning this, but I do think it’s representative of the general public’s view towards income tax: if there’s a legal way we can pay less of it, we’ll take it.

So putting income tax up? Yes, it might help to alleviate national debt and result in fewer years of suffering for future generations. Will it be popular now? Er, no.