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LuckyOne

High Vat Rates ......

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I have been thinking (often a bad sign) about VAT rates and have come to the conclusion that high VAT rates are intellectually dishonest. This dishonesty extends across the political spectrum.

The main reason for this claim is that it distorts both the perceived size of the state and the perceived redistribution of income.

From a high income earner's perspective, VAT makes up a relatively small proportion of the total taxes that they pay. To make up numbers to explain the argument, raising income tax rates by 10p and cutting VAT to 5% might be revenue neutral. High VAT rates are a means to placate the wealthy and to encourage them to keep their tax base here.

From a low income earner's perspective (either earned or unearned), VAT makes up a very high percentage of the total taxes that they pay. High VAT rates are really just a way to claim back income redistribution to the poor leaving the net amount of help much less than the gross amount. This allows politicians to claim that they are providing more help (the gross amount) than they actually are (the net amount).

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I fail to see how it's dishonest.

It's dishonest in the same way that the national lottery tricks people into thinking it's a good chance to win a million pounds because most people can't comprehend how little chance of winning they actually have.

Taking advantage of peoples stupidity, that's what a complex tax system is designed to do in the first place.

But that seems to be how our society works, take advantage of people in every way you can and then blame them for not being smart enough to realise the truth. If people were smart they would save their money from a young age and make clever investments in dividend paying stocks or resources like uranium and oil but instead they bought houses.

I've already thought about this VAT issue a long time ago and came to the same conclusion LuckyOne did. I didn't start a thread on it though because all the know it all regulars here probably already talked the issue to death though I admit it hasn't had it's own thread before.

One of the main lies we are told is that there is no VAT on food, but there is if you consider the VAT paid by the supply chain in getting that food to the supermarket.

Edited by Saberu

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I forgot to add that VAT is mandatory while income tax is somewhat voluntary.

Black market cash in hand? It all depends on how determined you are to fiddle the system. My present landlady's son seems to drive around quite happily in his untaxed car.

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VAT is a very bad tax for the poorly paid, they pay a far higher proportion of their income in taxes.

The lower paid are keeping the rich rich.......they pay tax on their income....then their taxed income goes to pay further taxes that are not optional, VAT is not an optional tax, council tax is not an optional tax, fuel to get to work or heat the home is not an optional tax.

Once they have worked long hours for very little they are then taxed to death, taxes on taxed money.........when will people cotton on, when will they see the light that they are being shafted from every direction........ :angry:

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The old argument between progressive and regressive taxation. Good article here:

http://www.psnw.com/~bashford/taxation.html

Worth a read. Only any minute now we'll get the usual right-wing nutters claiming that they shouldn't pay taxes as the state is a conspiracy to rob them of their hard-earned.

I am a right wing person. I also understand that it is my personal interest to pay some tax. I think that I have probably paid a bit more tax over my lifetime than rational, self interest would suggest.

That doesn't bother me nearly as much as the slippage between the taxes that I pay and the societal benefit derived from the taxes that I pay. This is the fault of the management of the income redistribution system (politicians, senior to mid level civil servants etc) and not the lower level workers or many / most of those being favoured by the income redistribution.

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I forgot to add that VAT is mandatory while income tax is somewhat voluntary.

Income tax is only voluntary for self employed people in certain industries where it's a peice of cake to get around it... that actually covers quite a lot though :ph34r:

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I have been thinking (often a bad sign) about VAT rates and have come to the conclusion that high VAT rates are intellectually dishonest. This dishonesty extends across the political spectrum.

The main reason for this claim is that it distorts both the perceived size of the state and the perceived redistribution of income.

From a high income earner's perspective, VAT makes up a relatively small proportion of the total taxes that they pay. To make up numbers to explain the argument, raising income tax rates by 10p and cutting VAT to 5% might be revenue neutral. High VAT rates are a means to placate the wealthy and to encourage them to keep their tax base here.

From a low income earner's perspective (either earned or unearned), VAT makes up a very high percentage of the total taxes that they pay. High VAT rates are really just a way to claim back income redistribution to the poor leaving the net amount of help much less than the gross amount. This allows politicians to claim that they are providing more help (the gross amount) than they actually are (the net amount).

I often think (must be catching) about the true cost of the benefits system, taking into account the tax intake from claimants.

For example, VAT on some food, VAT on energy, duty on cigs, booze and petrol with VAT added on top, to boot.

It wouldn't surprise me if some parts of the UK cost the treasury very little (cigs and booze being a staple diet for certain areas)

:)

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Income tax is only voluntary for self employed people in certain industries where it's a peice of cake to get around it... that actually covers quite a lot though :ph34r:

It is also voluntary for the very rich who are globally mobile.

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I often think (must be catching) about the true cost of the benefits system, taking into account the tax intake from claimants.

For example, VAT on some food, VAT on energy, duty on cigs, booze and petrol with VAT added on top, to boot.

It wouldn't surprise me if some parts of the UK cost the treasury very little (cigs and booze being a staple diet for certain areas)

:)

In one hand and out the other.........those on benefits take from the system and pay it back into the system.

The unfair thing about this is the full time worker who wants to support their family......all they are supporting is the government, landowners and big businesses shareholders...... :(

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In one hand and out the other.........those on benefits take from the system and pay it back into the system.

The unfair thing about this is the full time worker who wants to support their family......all they are supporting is the government, landowners and big businesses shareholders...... :(

And, of course, the newly created economic elite within the public sector.

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I have been thinking (often a bad sign) about VAT (...)

Depending on exemptions, VAT systems can be regressive or progressive. Here in Britain, housing and food are exempt from VAT. These two are obviously a much larger share of income for the poor than for the rich, but I don't know if these exemptions are enough to make VAT progressive here, as I haven't seen data about it. They may be though.

Regarding data, careful with data regarding "disposable income", as it may be after housing, or even after food, and then distort reality for political reasons.

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And, of course, the newly created economic elite within the public sector.

Very newly created and they will not give it up without a struggle....have you noticed how they are topping up their pay packets and entitlements their rights as fast as they can before the forthcoming chop, get in quick or be forever disadvantaged....

I don't mind paying my bit....but I don't like the feeling of being ripped off.....it is unsustainable.

house_of_cards.jpg

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High spenders pay more VAT.

Somewhere claimed that people would all be affected by about £400 extra vat a year. Well for the increase to be from 17.5 to 20% that works about 23k extra spending.

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The old argument between progressive and regressive taxation. Good article here:

http://www.psnw.com/~bashford/taxation.html

Worth a read. Only any minute now we'll get the usual right-wing nutters claiming that they shouldn't pay taxes as the state is a conspiracy to rob them of their hard-earned.

Easy tiger, this ain't the Daily Mail site....... :P

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Easy tiger, this ain't the Daily Mail site....... :P

Yeah, I know, but sometimes it just gets boring. The number of people with this idea that somehow there's a simple solution, and all we have to do is wave a magic wand and all the unemployed, dossers, scroungers, chavs, single mothers, etc etc, will turn into nice sober well-behaved hard-working middle class people and the government can get off our backs and all will be well in the world. It isn't going to happen.

Sometimes it feels like something in the air. We've had so many failed projects, so many schemes that have all run into the sand. We've done socialism, liberalism, conservatism, communism, workers' paradises, social democracy, fascism, Maoism, neo con, Thatcherism, privatise, deregulate, incentivise, unleash the forces of whichever new ism or management speak you choose. We've had re-engineering, just in time, outsourcing, insourcing, delayering, downsizing, upsizing, right sizing, knowledge management, process management, consultancy, McKinsey, private equity, floating, buying back, 10% rules, securitising, offshoring, onshoring, tax competition, tax harmonisation, shifting the burden of whatever. We've had targets, appraisals, one-to-ones, homeworking, video conferencing, networking, teleconferencing.

And after all that it's still a crock of sh!te and yet people still seem to think that there's some single magic bullet.

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And after all that it's still a crock of sh!te and yet people still seem to think that there's some single magic bullet.

Ah its just a puppet show for sales people to skim off the top. That's why we have religion as a backstop. "It's the journey, not the destination".

I don't think we've had a national monorail project, I think it will really revolutionise the UK and reduce our carbon footprint.

monorail.gif

Wow - Monorail!

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But that seems to be how our society works, take advantage of people in every way you can and then blame them for not being smart enough to realise the truth. If people were smart they would save their money from a young age and make clever investments in dividend paying stocks or resources like uranium and oil but instead they bought houses.

If you had bought £100k of stocks 10 years ago, you'd have a lot less money now. If you had bought a house, it would now be worth around £200K. The smart people bought the house, dont ever forget that. We are here because we thought we were smarter and didnt buy, not because we actually were smart, big difference.

Edited by Johnny Storm

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If you had bought £100k of stocks 10 years ago, you'd have a lot less money now. If you had bought a house, it would now be worth around £200K. The smart people bought the house, dont ever forget that. We are here because we thought we were smarter and didnt buy, not because we actually were smart, big difference.

This whole smart versus right thing is a bit of a challenge.

Fred Goodwin came out of the whole RBS debacle with a lot of money. For him, the result was right but I don't think that it makes him smart.

I see the world as being a very uncertain place. Two people with very robust decision making processes can come to different conclusions about the way that the future will unfold. In retrospect, one could be right and one could be wrong. They are both smart.

The same goes for people who have poor decision making processes. Just because they are right, they are not necessarily smart.

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I have been thinking (often a bad sign) about VAT rates and have come to the conclusion that high VAT rates are intellectually dishonest. This dishonesty extends across the political spectrum.

The main reason for this claim is that it distorts both the perceived size of the state and the perceived redistribution of income.

From a high income earner's perspective, VAT makes up a relatively small proportion of the total taxes that they pay. To make up numbers to explain the argument, raising income tax rates by 10p and cutting VAT to 5% might be revenue neutral. High VAT rates are a means to placate the wealthy and to encourage them to keep their tax base here.

From a low income earner's perspective (either earned or unearned), VAT makes up a very high percentage of the total taxes that they pay. High VAT rates are really just a way to claim back income redistribution to the poor leaving the net amount of help much less than the gross amount. This allows politicians to claim that they are providing more help (the gross amount) than they actually are (the net amount).

Only to the extent that their income goes on fully-VAT-rated goods, rather than on food or domestic fuel. If the so-called poor are really spending the bulk of their income on full VAT-rate goods, then there are questions to be asked about why is so much redistribution necessary in the first place? Perhaps it shouldn't be necessary to claw it back at all. [edit: it is in this area, IMO, that we find real dishonesty, but of the vote-buying rather than the intellectual kind].

Having said that, there's certainly a debate to be had about whether the current ratings are fair, and whether the system could be more flexible. I'd support making the first X units p.a. of electricity or gas zero-rated, for example. But to say that the system as a whole is fundamentally, intellectually dishonest? I don't buy it -- and neither do I buy many full-VAT-rate items :)

Edited by huw

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Its a tax on consumption , I don't see the problem with that , many essential items are zero rated to help the poor , its also a very cheap tax to administer and its very hard to avoid apart from small value items like dvd's from Jersey which they could stop in a heartbeat if they were bothered, also the fact its not printed on the item when you buy it means most people dont even realize they are paying it most of the time, so from the governments point of veiw they love it.

As the world gets more global and transfer pricing and the like mean big corporations pay less and less tax , the taxes that are going to be expanded are the easy ones to get so vat will be going up and up along with property taxes like stamp duty and council taxes.

Only when the government stop spending like crazy will vat and other taxes stop going up ....

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i'd like to disagree with you, LO.

To some extent VAT is avoidable:

grow your own food?

don't buy consumer cr*p

lending things http://www.streetbank.com/faq

freecycle

For the majority Income Tax is unavoidable - they take it before i even see it.

VAT is unavoidable....but by spending less and buying second hand you can avoid paying unnecessary taxes......bought some lovely bits of secondhand furniture recently....far better than the chipboard crap you get in the shops nowadays...had a healthy pitta-bread 29p for 6 large from the Greek shop, warmed and filled with fresh salad from the garden.....delicious.... ;)

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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