MSE News: Government defends VAT rise

JasonLVC

Just posted elsewhre on the forums the same thought, which I'm reproducing here.

The BBC TV license is a regressive tax. Council tax is a regressive tax. Alcohol and tobacco duty is a regressive tax.

All these things go up above inflation each year and there is no big fuss made - okay, we grumble on budget day but after a few weeks we've calmed down and carry on buying our fags and booze.

So why, when VAT is raised, is there such outrage? is it down to the media whipping up their usual cocktail of fear and mis-inforamtion?

VAT is arguably a regressive tax, but so are all the ones above and yet we pay these without grumble and for the poorer, struggle hard to pay them.

JasonLVC

CLAPTON wrote: »

technically true but in practice it depends upon whether or not the business can pass on the costs to the consumer;

Which is what I said.....remember, it is the choice of the business not to register for VAT so if their costs go up, they've only got themselves to blame.

The mandatory VAT registration limit in the UK is £70k, below that and you don't have to register, so many small traders do not bother. In other EU countries it is as low as 10,000 euros and so basically a much more level playing field as more or less every business is registered and can reclaim VAT.

Becuase our threshold is so high, we have this big disparity between registered and unregistered traders which arguably reduces the overall VAT take for the country and distorts competition (ie, unregistered plumber is cheaper than registered plumber).

Perhaps the coalition should have lowered the VAT limit to £10k and kept VAT at 17.5% and basically force every business to register for VAT - maybe that is too much of a shock to traders during this difficult economic time, but maybe we'll see that on years to come.....

madhatter1960

RBS are still paying huge bonuses to there staff, while we suffer for it. If they can't afford to pay it back, close some of the branches, & sell the buildings. Buy back all the comodities, gas, water,electricity, THATCHER sold when she was in power, then all the profit will go to the government, not the TORY cronies who greedily bought the shares in the first place. This government, will have us back to our bare feet before the end of this year. I for 1, will not be spending my hard earned money, on VAT.

Gas_Powered_Toothbrush

"If you look at the effects of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you" - David Cameron, May 2009.

"We have absolutely no plans to raise VAT." - David Cameron, April 2010

zagfles

Gas_Powered_Toothbrush wrote: »

"If you look at the effects of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you" - David Cameron, May 2009.

"We have absolutely no plans to raise VAT." - David Cameron, April 2010

Shurely everyone knows that when a politician says "we have no plans to..." that means they'll suddenly come up with the plan as soon as they get elected?

The hypocrisy of them makes me laugh though - like Labour slagging the LibDems for breaking their manifesto promise over tuition fees when the Labour broke their manifesto promise over the exact same issue a few years ago!!

Frozenace

VAT rise is minimal compared to the damage the train fare increases have done to the people.

I have an idea:

1) MPs expenses should be cut by (x) % equivalent to the train fare increases
2) We should no longer pay for Downing street 10 11, David cameron and that stupid chancellor guy should pay rent themselves while they occupy the premises.

3) break up RBS and lloyds.

davidgmmafan

It is a joke, but the real reason to be annoyed is not the rise itself. As has been pointed out if not VAT it would have to come from somewhere else which is arguably worse. The worst thing is they've slipped in this thing about the VAT rise being temporary. How the devil do you get from saying 'everything is because of the complete mess we inherited' to 'this VAT rise is permanent'. Very convenient that this is what the EU want wouldn't you say?

I've tried to adopt a live and let live approach to the EU but there seems no denying it is exercising more and more control over the UK with no corresponding decline in our own expenditure on oour own policital process. Also it does lots of bonkers things which its getting increasingly difficult to ignore.

Gas_Powered_Toothbrush

You can blame the EU all you want, but it wasn't them that elected the Tories.

The only saving grace is that if this is what's happened in the first year of the coalition, then after 5 years they'll hopefully be out of power for at least another 13 years. Now, if we could just get a credible left-wing party to step up so we don't have to rely on Labour...

Paulgonnabedebtfree

Gas_Powered_Toothbrush wrote: »

You can blame the EU all you want, but it wasn't them that elected the Tories.

The only saving grace is that if this is what's happened in the first year of the coalition, then after 5 years they'll hopefully be out of power for at least another 13 years. Now, if we could just get a credible left-wing party to step up so we don't have to rely on Labour...

Unfortunately the only decent left winger in this country happens to be a footballer.

John_Pierpoint

Exporters and those producing zero rate goods are now getting a bigger subsidy from the rest of us.

The zero rate bods are mainly farmers, why they get subsidised right and left is a mystery to me.

We need a change in domestic consumption to exports because our balance of payments is seriously under water.
Why we expect the rest of the world to subsidise our consumption also escapes me. Osbourne has been seriously worried that someone in the world will suddenly shout "the emperor has no clothes" and we would be down graded to the status of Spain & Italy.