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Constable

Measuring The Vat Squeeze

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Apologies if this has alerady been posted and discussed.

Interesting that VAT is not really regressive at all if measured by relative expenditure (which is what counts) rather than income.

Another phoney leftie argument put to bed!

I'm a fan of VAT - 'better to tax consumption rather than earnings - it's cheap to collect and difficult to evade (apart from tradesmen and the carousel fraud).

Edited by Constable

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http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2011/01/measuring_the_vat_squeeze.html

Apologies if this has alerady been posted and discussed.

Interesting that VAT is not really regressive at all if measured by relative expenditure (which is what counts) rather than income.

Another phoney leftie argument put to bed!

I'm a fan of VAT - 'better to tax consumption rather than earnings - it's cheap to collect and difficult to evade (apart from tradesmen and the carousel fraud).

Thought there is a Laffer type of thing with VAT as well as distortions (e.g. companies can sell to uk consumers at cheaper prices). 10% or so is probably

where the balance is. The government simply have to tax and spend less overall. The free wheeling era is now over.

Lots of factors at work but raising VAT from 15% to 17.5% actually result in less receipt:

2007/8 80.6bn

2008/9 78.4bn (15%)

2009/10 70.1b ( 17.5%)

2010/11 ?? (20%)

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Thought there is a Laffer type of thing with VAT as well as distortions (e.g. companies can sell to uk consumers at cheaper prices). 10% or so is probably

where the balance is. The government simply have to tax and spend less overall. The free wheeling era is now over.

Lots of factors at work but raising VAT from 15% to 17.5% actually result in less receipt:

2007/8 80.6bn

2008/9 78.4bn (15%)

2009/10 70.1b ( 17.5%)

2010/11 ?? (20%)

needs more context. Your figures are against the backdrop of the global financial crisis which started in america. What does it look like over several economic cycles?

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And yet, the traditional definition of a regressive, or progressive tax is relative to income. In those terms, the VAT rise is clearly regressive (as you can see on page 9 of that presentation from the IFS) The hit to the poorest 10th represents about 2.5% of their income, versus a roughly 1% hit for the those at the top. In that old-fashioned sense, the tax change is regressive.

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  • 312 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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