Thursday, July 31, 2008

What would happen to inflation/disposable income if that happened?

Britain should scrap zero VAT rate

Britain should abolish zero and reduced rates of VAT and use the revenue raised more directly to help the poor, a study commissioned by the Institute for Fiscal Studies says. --- So if someone has managed to survive their mortgage payments going up... you'll get hammered by an increase in VAT on Domestic Fuel, Food and Kids clothes (amongst others).

Posted by eyes_wide_open @ 12:52 PM (1049 views)
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28 thoughts on “What would happen to inflation/disposable income if that happened?

  • mark wadsworth says:

    They are absolutely f***ing mental, if you don’t mind me saying so. VAT (and sales or turnover taxes in general) are The Worst Taxes (along with Employer’s National Insurance). These taxes put businesses out of business, increase the cost of goods, reduce employment etc etc.

    Now, ask yourself, would cheaper goods and services and higher employment ‘help the poor’? I would like to think so. Is the fact that this also ‘helps the rich’ so-o-oo terrible?

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  • sold 2 rent 1 says:

    “VAT on Domestic Fuel, Food and Kids clothes (amongst others).”

    Are you ready to wake up, or is more destruction required?
    Actually don’t bother answering – MORE DESTRUCTION PLEASE – We know that is the only way.

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  • montesquieu says:

    All the Cameron-huggers out there should note that the IFS a heavily Conservative-leaning think tank which had considerable influence on(and connection with) the likes of Keith Joseph, Maggie’s mentor, and others heavily into right-wing economic theories.

    The low-paid have always paid more VAT (as a percentage of income) than the well-off and this is just yet another attempt to screw them again to the benefit of the rich.

    What was interesting was the complete absence of a serious case for the ‘benefits’ of standardisation (other than floating the idea of using some of the cash to put means-tested payouts up).

    It was Maggie, of course, who used huge increases in both absolute VAT levels (12% to 17.5%) and in shrinking the number of exemptions, to enable cuts in income taxes which vastly benefitted the better-off and penalised the poor. This carried on under Majo,r and Blair-Broon did nothing to turn back the clock.

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  • why not just make vat 10% and put it on everything…….

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  • Scrapping the zero VAT rate is a great idea.

    VAT is an excellent tax. It is cheap to collect and it is paid by those who choose to consume. It is a very fair tax. Over-consumption is one of our greatest problems – it damages the environment, it strains our natural resources (commodities) and it leads to unsustainable lifestlyes and bad values.

    Not only should VAT be placed on all products, the standard VAT rate should be increased from 17.5% to 25%. With the extra income earned, we should stop collecting inefficient taxes that cost a lot of money to collect. We could also reduce income tax to boost the economy.

    As for the advice in this article that the money raised should be used to help the poor, I disagree. The government already spends too much money – more than they collect in taxes. The deficit that keeps accumulating is a bad way of running the country. The government needs to cut spending, not increase it.

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  • Eyes_wide_open says:

    @s2r1

    I’m well awake, hence my name.

    This kind of thing will hopefully stir the masses away from their TV screens and Playstations long enough to make them think about where this country could be heading.

    My wish is that the idea of slapping people with more punitive taxation – fails miserably.

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  • japanese uncle says:

    The simplest solution is to get back to the pre-Thatcher regime of high progressive taxation. Goverment finance is mended, ordinary people on the stree can enhance thier consumption to activate the economy, tra-rah, This will be bad news only to private jet makers or luxurious yacht industries.

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  • I can’t believe that these so called experts can come out with trash like that. If they want to raise additional monies to help the poor, rather than the rich, then raise the level of taxation under income tax for the rich. Means tested benefits are all very well and good but don’t necessarily target or help those who need them most. I thought the governmental consensus was to stop Stealth Taxes as Joe Public can bear no more.

    As for saying that it would cut down on administration, it just introduces more means testing. These people don’t live in the real world – British Gas has just advised it is raising its supplies by 35%.

    If Government wants to save some money, sack these overpaid idiots.

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  • japanese uncle @ 5

    “The simplest solution is to get back to the pre-Thatcher regime of high progressive taxation.” Agreed.

    My god man, undo nearly 30 years of Thatcherism! Are you mad man! What go back to providing state financed social housing, back to a time when rich people actually paid more TAX, back to a time when your home was your home not the first rung on the ladder or your chuffin pension! The next thing you’ll be asking for is the return of house prices to their 1979 levels! Oh bugger they appear to be falling so fast that they may indeed get there anyway!

    I personally would like to see a 50% tax rate for seriously loaded buggers and I would also like to see ceiling on national insurance lifted as I think it’s a bloomin sneaky tax that only the bottom half of earners pay the full wack for!

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  • a study commissioned by the Institute for Fiscal Studies

    Balls! Crackpot thinking from a crackpot organisation.

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  • japanese uncle says:

    nooneo

    95% tax rate for the wealthy will do a lot of good to this nation. Nearly privatized (by stealth) NHS will be again purely 100% state healthcare which treat the wealthy or the poor alike. NHS dental treatment will be back in town. Most schools will get back to state schools. Casinos will be scrapped and replaced by libraries. Private sports clubs will be replaced by council pools where kids can swim and train for free. Then they no longer need to spend their precious time illegally drinking, smoking, using drugs, but reading and swimming, which will in the long run tremendously enhance the national strength. Rotten riches in the capital who do not know how to work but live like parasites will have to start doing some decent work. They can get rid of cracks or cannabis or heroine as they will no longer afford! to be reborn as reformed persons. No complaints.

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  • Phew. Quite a manifesto JU.

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  • japanese uncle says:

    Additionally:

    This should happen under the New World Order in which no nation can be excempted. 95% tax rate should be introduced into all nations silumtaneously. Effective solution.

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  • last_days_of_disco says:

    The reality is that you have to be fair across the board. Taxing the rich just because they are rich smacks of greed and envy and it never works because it is monstrously unfair — I am not rich by the way. You have to tax people basically fairly. If you want a third world “paradise” be unfair to the rich. That is the hard truth. Socialism just impoverishes everyone. Lets not forget that the government that just did this to us was socialist with a “new” economic model — tax and spend on credit — wait a second, didn’t they do that before? At least all the bogus jobs for the boys a girls are going to be history.

    Bye bye, “days out” organizers for the elderly earning 40k a year and and and … NHS/Public “service” bubble looking shaky…

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  • 1. 50% taxation on those earning £250k+ then 2% addition on subsequent blocks of £250 upto a max of 60%
    2. Some sort of tax for M&A activity on foreigners purchasing UK firms or assets
    3. No more spending on nuclear subs or missiles – let’s just lease a few instead
    4. Get those parasitic MPs onto proper, accountable salaries like the rest of us and end their expenses Gravy train
    5. Gordon Brown to Personally contribute back all the money he pi*sed down the drain by selling UK Plc’s Gold reserves
    6. Real qtr on qtr reductions for Govt quangos until there aren’t any left – start with the institute for fiscal studies (how very dare they!)
    7. Get out of Iraq & Afghanistan now – how much are we on the hook to rebuilding the devistation we helped rault?!

    What we should have is a proper annual report on UK Plc, audited by a proper Auditor, so that we, the public can see exactly where and how these ‘people’ are spending our very hard earned money.

    In reality, they’re coming after us, so sensible ideas are moot.

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  • Remember one thing before talking about the 50% tax rate, prior to Maggie ( RI..p – a very small “p” soon with luck ) most companies knew their directors and senior managers had to pay high tax and compensated accordingly, Maggie gave these guys the biggest pay rise of their lives and permanently damaged the UK.

    Blair and Brown are so scared of appearing to be Labour that to be honest its difficult to know who is doing more damage to the working man Labour or Conservative.

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  • last_days_of_disco says:

    @layers

    Proper spending in the military is a good idea. Its a big waste of money. We could have twice or three times the army we have if we just got rid of white elephant projects and only bought what we *really need* — like proper armored vehicles instead of those stupid glorified coke cans from the 80s called “warrior armored vehicles”.

    Although leasing nukes, now I have never heard of that. Interesting ;-). Would the lease preclude using the weapon against the lessor, or some such provision? 😀

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  • JU – “which will in the long run tremendously enhance the national strength.” Indeed so, obergruppensturmenfuhrer. Will the youth have to sing patriotic songs, too? “95% tax rate should be introduced into all nations silumtaneously. Effective solution.” If you say so, comrade! Whither personal freedom in your totalitarian regime?

    I am able to go for the facetious repsonse because last_days – he talks sense.

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  • Point of order, too – the richest 10% of wage-earners in Britain pay 53% of all tax collected. The richest 1% pay 23% of all tax collected. Pretty redistributionist, no?

    http://www.spectator.co.uk/coffeehouse/178381/guess-how-much-tax-the-rich-pay.thtml

    http://www.hmrc.gov.uk/stats/income_tax/table2-4.xls

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  • I like the idea of tinkering with VAT for the very simple reason that the richer you are the more in tax you pay. VAT could also be charged at higher rates on some of the ridiculously priced footballer style goods such as bling, cars, cristal champage etc. You could target essentials with lower rates of VAT such as takeaways, childrens stuff, fuel. The only reason Governments dont like doing this now is that it plays havoc with the inflation figures.

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  • maddison @ 14

    “You could target essentials with lower rates of VAT such as takeaways, childrens stuff, fuel….”

    You might have trouble persuading many that your takeaways are essential! I hate to be an ol’ stick in the mud and sounding like a presbytarian PM but takeaways are really luxuries, even if relatively small ones.

    That said I’d murder any bugger getting between me and my curries!

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  • Orcusmaximus says:

    “If 12 billion pounds of this extra revenue were used to raise means-tested benefits …”

    I see it now – following on from the “success” of tax credits, we have … VAT Credits!

    Why not just move to a complete communist system. You give all your money to the state and the state spends it for you. After all, it worked in Russia didn’t it? Maybe not.

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  • Is the hidden nu labour manifesto to make Joe Average a serf again?i

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  • Get out of Europe now, close the borders and setup international trade with India, Russia and China. Who needs the rest of Europe now. The Euro is about to fail.

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  • mark wadsworth says:

    Y’see this is the sort of nonsense we get if people make it up as they go along.

    VAT is the worst kind of tax, that is the point.
    Then Employer’s NI

    The least bad tax is Land Value Tax
    The next least bad is a flat income tax (no more than 30% hopefully)

    Instead of this ‘tax the rich’ nonsense (a 50% tax rate might scrape in an extra £10 bn or something) why not get public spending back down to (say) 2001 levels of 38% of GDP, not 45% as now? That’s save £100 bn a year or so. Then if there’s a shortfall, we can talk about getting more from the rich.

    And if you really want to get more tax from the rich, before you start inventing 50% tax rates, how about getting rid some of the incredibly generous reliefs (in particular higher rate relief for pension contributions up to £215,000 a year), or indeed, my old favourite Land Value Tax?

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  • Orcusmaximus says:

    mark wadsworth – “getting rid some of the incredibly generous reliefs (in particular higher rate relief for pension contributions up to £215,000 a year)”

    What? After Brown started taxing private pensions (to fund his own public pension no doubt), you are advocating a double tax on it? How unfair is that!

    No, keep with the reduced public spending theme. Especially as our health care, education, and transport infrastructure keep slipping down the European league tables despite the vast increases in spending.

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  • Am all in favour of lowering public spending – so maybe we should be renationalising utilities and using the billions in profit to fill the coffers. Cap senior mgt pay to a million or so to attrack top talent. Point is we need a pragmatic vision for all. 50% over 250k I don’t think is unreasonable.

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  • mark wadsworth says:

    Orcus, I am not advocating double taxation on anything, and certainly not private savings. Why don’t you and go and do an accounts and economics degree, do your accountancy and tax exams and round it off with a law degree, work for twenty years as a tax advisor (with a keen interest in the property market and economic cycles) and so on and we’ll have this discussion again.

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