Ed Balls calls for emergency tax cut

hcb42

vax2002 wrote: »

The worst is VAT, only the poor pay it.

Well I am quite well off too, compared to many - if you can tell me how I am not paying it this week - on my purchases, in particular my loft extension and I will give you a cut for your trouble.

I work as does my hubby, and we don't know anything about building so we have paid a builder to do the work.;)

Surely if I earn £100K (and presumably spend much of it) and someone earns £10K and spends all of it, then there is no way on this earth that someone paying £10K will pay as much vat.

PS: what is ED on about. We already went down this VAT reduction road in 2009 didnt we!

JasonLVC

lazer wrote: »

Personally, I'm in favour of a full review of VAT, starting with a full review of the VAT exempt, zero rated and reduced VAT goods, to ensure that all essentials are actually VAT free. Remove VAT on electricity, gas and fuel (or decrease the rate even further to say 2%), all fresh food VAT free, and introduce a new higher rate VAT (eg 30%) for unhealthy food & drink, such as crisps, chocolate, mineral, cakes, buns, microwave meals etc. As long as all essentials are actually VAT free, I have no objection to increasing it by another 5%. To me it is fairer to increase VAT, than to increase income tax, as it is the tax everyone pays!

You may be bitterly disappointed....currently involved with a European wide review of the VAT legislation and the main ideas on the table at present are :-

• Allow full input tax recovery relating to business or charitable activities
• Abolish the concept of exemption - all supplies either positive rated or outside the scope with recovery
• Substantially reduce the range of supplies not subject to VAT
• All public transport to be outside the scope with recovery

So if the ideas are adopted in some form, we'll be seeing VAT on more or less everything (but maybe at a reduced rate) in the distant future.

The lowest VAT rate for utilities is 5%, we cannot go as low as 2%, against EU rules. Utilities cannot be VAT free either. Cannot have more than 1 reduced and 1 standard rate either so cannot introduce a third (30%) rate without unilateral support from all EU member states.

lazer

JasonLVC wrote: »

You may be bitterly disappointed....currently involved with a European wide review of the VAT legislation and the main ideas on the table at present are :-

• Allow full input tax recovery relating to business or charitable activities
• Abolish the concept of exemption - all supplies either positive rated or outside the scope with recovery
• Substantially reduce the range of supplies not subject to VAT
• All public transport to be outside the scope with recovery

So if the ideas are adopted in some form, we'll be seeing VAT on more or less everything (but maybe at a reduced rate) in the distant future.

The lowest VAT rate for utilities is 5%, we cannot go as low as 2%, against EU rules. Utilities cannot be VAT free either. Cannot have more than 1 reduced and 1 standard rate either so cannot introduce a third (30%) rate without unilateral support from all EU member states.

Thanks for that - that jsut strenghtens my previous belief, that I don't like the UK being a member of the EU! As far as I can see the only benefit is free trade.

chewmylegoff

JasonLVC wrote: »

The lowest VAT rate for utilities is 5%, we cannot go as low as 2%, against EU rules. Utilities cannot be VAT free either. Cannot have more than 1 reduced and 1 standard rate either so cannot introduce a third (30%) rate without unilateral support from all EU member states.

presumably though we could just add an additional tax on 'bad for you' food, and call it something else, rather than VAT - in the same way that there is a duty on booze and cigarettes? may have to tax at wholesale point rather than retail point so it is just passed on to the consumer rather than the consumer seeing the tax on their receipt?

Graham_Devon

chewmylegoff wrote: »

presumably though we could just add an additional tax on 'bad for you' food, and call it something else, rather than VAT - in the same way that there is a duty on booze and cigarettes? may have to tax at wholesale point rather than retail point so it is just passed on to the consumer rather than the consumer seeing the tax on their receipt?

Fattie duty.

Same as fuel. You get charged VAT and Duty.

For your chocolate cheesecake you'd get charged VAT and fattie duty.

JasonLVC

Graham_Devon wrote: »

He's obviously talking about a reduction in VAT.

Balls' seems to be recycling the same argument over and over, about cutting VAT. He was banging on about it this time last year (http://www.edballs4labour.org/blog/?!!!!!vat), so our new shadow chancellor has had over a year to conjure up some new budget and economic plans to counter act the struggling coalitions budgets........and one year on all he's got for us is the same argument he had a year ago.

The VAT cut implemented by Darling in 2009 did not see a significant impact on economic growth in the subsequent trading quarters, more an initial 'blip' (http://www.ifs.org.uk/wps/wp0902.pdf).

More about the impact of VAT decreases and the impact with reference to the Ricardian Equivalence is in the link just noted, more info about Ricardo here (http://en.wikipedia.org/wiki/Ricardian_equivalence) which basically means that generally people do not adjust their fiscal habits to coincide with tax changes (ie, if income tax went up 3% tomorrow not many of us would seek to earn more or less to comepnsate, we just moan and carry on as before.

chewmylegoff

Graham_Devon wrote: »

Fattie duty.

Same as fuel. You get charged VAT and Duty.

For your chocolate cheesecake you'd get charged VAT and fattie duty.

well, since both chocolate and cheesecake are bad, you'd probably pay the duty with a politically correct name squared.

alternatively you could be taxed on your average blood sugar level. sorry hyperglycemic diabetics, no system can be fair to everyone.

grizzly1911

Really2 wrote: »

But if they operate in this country (like harry ramsden) they pay tax on all their UK workers, Sell a VATable item and pay UK tax on their UK profits.

To the government what they receive has not really changed.

Take your point probably not the best example.

I agree the tax NI and NI and VAT are paid in high labour service industries.

What I was, badly, trying to get at was the profits that go over seas ("home" business also) that is not fully taxed and removed form the UK economy.

JasonLVC

chewmylegoff wrote: »

presumably though we could just add an additional tax on 'bad for you' food, and call it something else, rather than VAT - in the same way that there is a duty on booze and cigarettes? may have to tax at wholesale point rather than retail point so it is just passed on to the consumer rather than the consumer seeing the tax on their receipt?

I cannot see anything stopping us adding a 'fat duty' onto fatty foods, like you say, in the same way we have an alcohol, cigarette or fuel duty.

Although if people are saying VAT is regressive for the poor, I wonder what the reaction would be if a government introduced a fat tax which, arguably, would affect the poor more than the rich.....still, the poor are already paying duty on fags and booze and yet the duty isn't considered regressive. Go figure.

Really2

Graham_Devon wrote: »

Fattie duty.

Same as fuel. You get charged VAT and Duty.

For your chocolate cheesecake you'd get charged VAT and fattie duty.

But that would tax the poor more as they are the ones exposed to the highest fat content foods due to budget.

EG Sausages, burgers are all cheap sources of protein.