Tory cuts could be mighty unpleasant

Sir_Humphrey

Old_Slaphead wrote: »

I think you've got that wrong - it's completely unfair as it's imposed irrespective of ability to pay thereby disproportionately affecting the poorest in our society.

That was one point where I disagreed with Kennyboy66. It will be interesting to see if the Tories really are "the party of the poor" - they certainly would not be if they jack up VAT instead of direct taxation.

But I agree with Kennyboy66 in every other respect - taxes are going up folks - get used to the idea!

kennyboy66_2

Old_Slaphead wrote: »

I think you've got that wrong - it's completely unfair as it's imposed irrespective of ability to pay thereby disproportionately affecting the poorest in our society.

Except its not charged on food, childrens cloths, public transport and some other stuff.
Its only charged at 5% on domestic heating.
Its not charged on domestic rent.

So clearly it doesn't disproportionatly affect the poorest.

The more shiny, standard rated stuff you buy, the more you pay. Simple as that.

kennyboy66_2

Sir_Humphrey wrote: »

That was one point where I disagreed with Kennyboy66. It will be interesting to see if the Tories really are "the party of the poor" - they certainly would not be if they jack up VAT instead of direct taxation.

But I agree with Kennyboy66 in every other respect - taxes are going up folks - get used to the idea!

Whilst VAT is a regressive tax, all the UK studies have shown it is certainly not the poorest decile of people who are most affected, as most of their spending is on non VAT rated essentials.

As the poorest 10th decile have done worse than any other group under Labour, it will be a bit rich for Labour to claim foul on this.

The people who are generally the most adversely affected are middle income families. Families that have 1 or 2 cars, drink and smoke, have one foreign holiday a year, have teenage kids whose clothes often have VAT on them, etc, etc

Increase VAT also has the benefit of being easy to collect, hard to avoid and it doesn't interfere in the job market the way the myriad tax and benefit system clearly does.

Thrugelmir

kennyboy66 wrote: »

Whilst VAT is a regressive tax, all the UK studies have shown it is certainly not the poorest decile of people who are most affected, as most of their spending is on non VAT rated essentials.

As the poorest 10th decile have done worse than any other group under Labour, it will be a bit rich for Labour to claim foul on this.

The people who are generally the most adversely affected are middle income families. Families that have 1 or 2 cars, drink and smoke, have one foreign holiday a year, have teenage kids whose clothes often have VAT on them, etc, etc

Increase VAT also has the benefit of being easy to collect, hard to avoid and it doesn't interfere in the job market the way the myriad tax and benefit system clearly does.

Also its an optional tax. That one only incurs if one spends giving one an option to save disposable income.

Spiv_2

Cameron Debt Fix Called ‘Bizarre’ by Ex-BOE Officials

David Blanchflower, who left the bank’s Monetary Policy Committee in May, said Cameron’s speech yesterday was “bizarre” and if put into practice may tip the U.K. into a “depression.” Shamik Dhar, a former Bank of England economist, said “at best this is wrong and at worst downright dangerous.”

Blanchflower said it’s wrong to cut spending and shrink the size of the state before economic recovery is firmly rooted.
“Talk of repaying the debt, if you like, is fine in a boom, but not in the depths of the greatest recession we’ve seen in our lifetime,” Blanchflower said in a separate interview with Bloomberg Television yesterday. “It’s all about timing. Clearly you need to control the debt, but now? I don’t really think so.”

Blanchflower said Cameron’s program was “the most wildly dangerous thing I have seen in a hundred years of economic policy in Britain.”The economist from Dartmouth College in Hanover, New Hampshire, who was among the first to urge the central bank to stimulate the economy, said the Conservatives showed “no understanding of economics. It could drive the economy into depression.”

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alRJZR46O3CY

carolt

Thrugelmir wrote: »

Also its an optional tax. That one only incurs if one spends giving one an option to save disposable income.

But I thought that in order to get the economy out of recession we were all being encouraged to save less, spend more? Not sure how jacking up the price of everyday goods like clothes etc via taxation is going to encourage people to spend more. And if shops absorb the cost, surely that's going to hit them?

i8change

Originally Posted by bendix
Positively racing towards it, eyes open, celebrating and crying out joyously.

Sounds like a dog when it has been let off it's lead. A little terrier perhaps. :rolleyes:

Old_Slaphead

kennyboy66 wrote: »

Except its not charged on food, childrens cloths, public transport and some other stuff.
Its only charged at 5% on domestic heating.
Its not charged on domestic rent.

So clearly it doesn't disproportionatly affect the poorest.

The more shiny, standard rated stuff you buy, the more you pay. Simple as that.

Who's to say some of these charges won't be brought into the net.

Anyway, domestic heating VAT - although it is currently 5%, currently affects poor more. Adult cloths are taxable - we all need them. Household repairs, car servicing etc are similar whether you've got a big/small house/car. Entertainments - same for both groups.

Poorest should benefit from little or no income tax - same can't be said for VAT which is imposed on many essentials.

I think you're arguing against perceived wisdom here that indirect taxation is "fairer" than direct tax.

carolt

And let us not forget sanitary protection! - tampons/sanitary towels are charged VAT. Because they are, apparently, 'luxury' items.

I don't think so.

Sir_Humphrey

The trouble with VAT is that it has gradully replaced income tax as a major revenue earner.

It did not exist before 1973 - previously there was a purchasing tax which only applied to big ticket or genuine luxury items such as TVs (this is the 1960s definition of luxury remember!) From 1973 onwards (and particularly under Thatcher and Major), VAT was jacked up as income tax reduced, and it's scope gradually extended.

I think most people have forgotten the plans the Major govt had to extend the full rate to heating fuel, and also impose it on currently exempt items such as children's clothes and children's books.