Jump to content
House Price Crash Forum
Sign in to follow this  
scrappycocco

Vat On Everything

Recommended Posts

The cheek of them. No doubt this will have to happen to sustain this scumbag public sector:

http://www.citywire.co.uk/money/vat-on-everything-they-must-be-joking/a524045?ref=citywire-money-latest-news-list

Not so stupid; he's talking about taxing spending rather than income and, this at least, makes some sense. It would of course push inflation up initially which is certainly not helpful in the current circumstances.

Share this post


Link to post
Share on other sites

The cheek of them. No doubt this will have to happen to sustain this scumbag public sector:

http://www.citywire.co.uk/money/vat-on-everything-they-must-be-joking/a524045?ref=citywire-money-latest-news-list

Hey, the 50% higher rate income tax is almost as good as gone (judging from the huge surge in anti-50% tax pieces that have all popped up recently in the media) at the next budget so the money has to be recouped somewhere else.

I wouldn't expect the VAT to be extended to banking or anything else that might hurt the business of the big boys though (e.g. gambling) - so probably just kids clothes and the foods that are currently exempt. Books too.

Share this post


Link to post
Share on other sites

They also suggest scrapping stamp duty and a new annual property tax

One of the main recommendations proposes that stamp duty should be scrapped and describes the tax as an ‘obviously stupid’ levy because it deters people from moving house. Whilst there is no doubt that stamp duty on property transactions can act as a disincentive to move house, the current shortage of mortgage funds on reasonable terms is a far greater constraint than anything imposed by stamp duty. In any case, first-time buyers purchasing properties worth up to £250,000 are currently exempt. Moreover, any disincentives that stamp duty imposes could easily be dealt with by making the tax payable by the seller rather than the buyer. Most sellers can afford to pay the tax out of profits.

The IFS suggests that council tax should be replaced with a new annual property tax based on a percentage of the value of the property. This reformed council tax, which the review calls a housing services tax, would effectively stand in place of VAT on housing. Whilst a case can be made for a property tax, the expense of revaluing all properties and constantly updating these valuations is considerable.

Council tax is still based on out-of-date valuations made in 1991 which the IFS says is ‘ridiculous’. But the fact that successive governments have postponed a revaluation of properties for council tax purposes indicates that the costs outweigh the benefits. It would be fairer to bring homes into the capital gains tax net. In addition, many low-income property owners would be unable to pay an annual property tax based on even 1% of the property’s value. With the average home now valued at around £250,000, a tax of £2,500 a year would cripple many elderly homeowners.

Share this post


Link to post
Share on other sites

Not so stupid; he's talking about taxing spending rather than income and, this at least, makes some sense. It would of course push inflation up initially which is certainly not helpful in the current circumstances.

It makes sense if you happen to be rich. However, since many of our current problems stem from the erosion of spending power of the middle-to-lower income parts of society, the general effect on the economy would be bad.

Share this post


Link to post
Share on other sites

Tax the profits on housing and back date it 25 years :lol:

That would be a bit unpleasant for some of us..

'Congratulations! Thanks to a vast asset bubble, your house has gone up in price by £60k - theroetical money which you never wanted and can only realise if you sell up and live on the street. Now - here's a tax bill on it!'

Share this post


Link to post
Share on other sites
It would be fairer to bring homes into the capital gains tax net. In addition, many low-income property owners would be unable to pay an annual property tax based on even 1% of the property’s value. With the average home now valued at around £250,000, a tax of £2,500 a year would cripple many elderly homeowners.

That would be even more of a disincentive to sell than stamp duty. If a 1-2% stamp duty is dissuading people from moving house, the CGT (what is it - 14% or something?) would do that with a vengeance. You would get a shedload more unintended BTL-ers for one thing.

Share this post


Link to post
Share on other sites

That would be a bit unpleasant for some of us..

'Congratulations! Thanks to a vast asset bubble, your house has gone up in price by £60k - theroetical money which you never wanted and can only realise if you sell up and live on the street. Now - here's a tax bill on it!'

A property tax based upon the rentable value of your home is probably the way that they will eventually go. Dressed up with all sorts of exemptions and rebates at time of introduction to make it look like the average person won't have to pay more than before ... but turning every single owner-occupied house into a revenue generator from now 'til eternity.

It would also make it harder for BTLers to avoid paying tax on income from rental properties which from experience seems to be a very widespread state of affairs.

Share this post


Link to post
Share on other sites

Lets hope it includes financial transactions then, of course its a great way to recapitalise the banks by the back door as discretionary spending (read imports) will fall so less money leaving the country in exchange for worthless disposable breakable tat that ends up in landfill this a bonus for the environment with only essential spending taking place read seasonal foods (which are good for local producers) and thus incurring vat.

Are these time rich cash poor individuals? If so nothing wrong with growing their own veg to offset their costs and it goes without saving of course the poor will be hit hardest in terms of % of income, but what you might have failed to recognise is that the rich will pay the most vat in terms of amount, ie a £100k car with vat at 20% is £20,000 to the treasury, a £1k push bike is only £200 to the treasury, so perversely the rich end up being made to pay more of their share as accountants cant tax avoid the vat for them on this one. :D

Dont know why people are whinging. :rolleyes:

Agreed

Share this post


Link to post
Share on other sites

They also suggest scrapping stamp duty and a new annual property tax

Yes this bit of the article:

Whilst there is no doubt that stamp duty on property transactions can act as a disincentive to move house, the current shortage of mortgage funds on reasonable terms is a far greater constraint than anything imposed by stamp duty. In any case, first-time buyers purchasing properties worth up to £250,000 are currently exempt. Moreover, any disincentives that stamp duty imposes could easily be dealt with by making the tax payable by the seller rather than the buyer. Most sellers can afford to pay the tax out of profits.

Is particularly moronic. As if taking a tax out of the seller side rather than the buyer side of a transaction makes any difference to transaction cost!

Stamp duty is really counter-productive tax.

Share this post


Link to post
Share on other sites

VAT is a consumption tax. In a world of finite resources, to me that makes sense.

It makes sense BUT ONLY IF these resources are evenly distributed, or distributed according to merit. Unfortunately neither is the case. Higher VAT will just serve to keep the poor poor. It'll be even harder for anyone not born wealthy to achieve financial freedom.

Share this post


Link to post
Share on other sites
There is, however, a good case to be made to extend VAT to some categories which are currently exempt – for example, betting, the National Lottery and financial services

What would that involve?

Share this post


Link to post
Share on other sites

That would be a bit unpleasant for some of us..

'Congratulations! Thanks to a vast asset bubble, your house has gone up in price by £60k - theroetical money which you never wanted and can only realise if you sell up and live on the street. Now - here's a tax bill on it!'

I remember that sort of thing happening back in the 70s. Can't remember exactly which taxes were involved but I do remember one guy who had to borrow to pay the tax on a profit he had not realised. That was in the days of Dennis 'tax the rich until the pips squeak' the Menace Healey.

Share this post


Link to post
Share on other sites

Harmonising VAT is viabe assuming:

A) You keep it low enough - 10-15%

B) You adjust income tax allowance up to £15k

C) You adjust unemployment benefits and pensions up by 10%

B&C could also be swapped for a universal payment paid to all regardless of employment status.

Given that inflation is 5%+ at the moments, setting VAT to 15% on EVERYTHING wouldn't have as big impact as people say. Gas has gone up over 50% in the last 12 months and no-one has died yet.

Ultimately what we need is an annual land value tax though.

Share this post


Link to post
Share on other sites

I remember that sort of thing happening back in the 70s. Can't remember exactly which taxes were involved but I do remember one guy who had to borrow to pay the tax on a profit he had not realised. That was in the days of Dennis 'tax the rich until the pips squeak' the Menace Healey.

Probably betterment Tax:

(i) The level of betterment taxation.

Historically betterment taxation rates were based on the laudable principle that all the value created by the state should be recouped by it. Experience after the 1947 Planning Act illustrated that such a 100% levy effectively killed off the speculative market in land, reducing supply to a very low level. One might argue that in an era when it was assumed that most development would be delivered by the public sector it was not a problem. The repeal of betterment taxation in the 1950s led to a resurgence of private sector development and it is clear that a future betterment tax would have to be set at a socially acceptable level. This figure would need to take account of the fact that the private sector is already paying considerable and complex informal taxes through planning gain deals which go beyond the mitigation of direct impact of development.

(ii) Cross-party consensus.

The reintroduction of betterment a tax in the 1960s and again in the mid-1970s under Labour administrations were set to a more modest but still relatively high rate of 40%. These taxes had a disproportionate effect on reducing land supply because the opposition made clear that they intended to repeal the legislation if they came to power. Landowners therefore horded the land in the hope of receiving the full value later. In the future it would be vital to have a consensual approach to setting taxation rates at levels which do not snuff out all land speculation. (An initial view based only on a judgement between what might be politically acceptable to industry yet still relatively effective in delivering environmental goods would be around 20%).

http://www.publications.parliament.uk/pa/cm200304/cmselect/cmenvaud/490/4032404.htm

and /or Development Land Tax

The Conservative government had floated ideas for modest

taxation of ‘development gains’. The Development Land Tax

(DLT) was set at 80%, collected through Capital Gains Tax

(CGT) if sale was involved, but also at time of planning

permission through ‘deemed development’. The Acts were

hugely complicated and repealed by the Conservatives in 1979

and 1985 respectively, although the DLT was retained at 60% for

a few years.

libdemsalter.org.uk/en/document/alter.../alter-flyer-lvt-history-a5.pdf

Share this post


Link to post
Share on other sites

Some companies who dont do cash accounting for the VAT can end up in this situation. Cash Accounting VAT is paid on cash recieved, the other way is to pay vat on invoices sent out regardless of them being paid for or not.

So if you have a big bad debt you can be in real cash flow trouble till HMRC are really convinced it's irretrievably bad.

Share this post


Link to post
Share on other sites

Yes this bit of the article:

Is particularly moronic. As if taking a tax out of the seller side rather than the buyer side of a transaction makes any difference to transaction cost!

Stamp duty is really counter-productive tax.

Dont all taxes discourage what it is that is taxed?

If they are going to produce a property value tax, then they should make sure that it is progressive. So that anyone with more than property of say a million quid really gets to pay through the nose. Penal rates for non-UK citizens too. At the moment council tax is highly regressive and levied on people having the audacity to live somewhere. That needs to be changed so that it is the owner that gets the bill. Make it highly progressive, and landlords with big portfolios get smashed to smithereens.

Share this post


Link to post
Share on other sites

To charge VAT on things which are currently exempt (in the true sense of the word, not zero rated (such as food, books etc)) would require the UK to leave the EU.

VAT is a European tax, and specifically the exemptions are European wide and contained in VAT directives. If the UK changed these, businesses would have recourse to the ECJ to enforce their community rights.

Equally those suggesting a rate below 15% have the same problem - 15% is the lowest standard rate allowed under EU legislation.

Now you might consider leaving the EU to be a good thing, but let's face it it's not happening any time soon... and while we're in it, we're stuck with these exemptions.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 298 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.