is vat stuck t 20% fore the forseeable future?

londonTiger

Was it just a short term measure to cut the defecit or will we see this continue on indefinately?

I have to say that 20% seems quite large psychologically, I'm buying a web service from Europe where the vat is 23% which is quite a hefty proportion of the cost of the service.

For consumers it's a lot more attractive to buy from the US where there is no sales tax. But because this is a business purchase I will have to pay the VAT at year end though so it makes little difference to me as a business owner.

17.5% seems a lot more tolerable than 20%

RetiredInThailand

Most of the EU budget comes from the percentage of national VAT that they receive. So I always expect the EU to be encouraging member states to increase VAT rather than reduce it, so that the EU has more money to squander on expensive nonsense. The trend is also towards harmonisation of VAT rates throughout the community (lowest to highest, of course), so for this reason also I expect it to rise or, at best, stay the same. And of course individual EU governments are looking to decrease expenditure and increase income. So I expect VAT to rise rather than fall for that reason also.

All in all I dont see VAT ever decreasing.

antonic

It all depends on the will of our political masters and how desperate they are for cash !.

londonTiger wrote: »

Was it just a short term measure to cut the defecit or will we see this continue on indefinately?

I have to say that 20% seems quite large psychologically, I'm buying a web service from Europe where the vat is 23% which is quite a hefty proportion of the cost of the service.

For consumers it's a lot more attractive to buy from the US where there is no sales tax. But because this is a business purchase I will have to pay the VAT at year end though so it makes little difference to me as a business owner.

17.5% seems a lot more tolerable than 20%

property.advert

You ain't ever seeing 17.5% Vat again but you may well see 22.5% or even 25% within the medium term.

EU tax rates http://en.wikipedia.org/wiki/Tax_rates_of_Europe

John_Pierpoint

Estonia 21% 21% 20%[3]
United Kingdom 20% for small annual profits under £300000 and 25% for annual profits over £300000 (further annual decreases planned)[22] 20% on annual incomes up to £35000, 40% on annual incomes between £35000-£150000 62% between £100000 and £114950 and 50% on annual incomes above £150000 plus national insurance contributions at various rates between 2% and 13.8% [23] 20% ( reduced rate of 5% for home energy and renovations, 0% for life necessities - groceries, water, prescription medications, medical equipment and supplies, public transport, children clothing, books and periodicals) [3]

Keep it simple stupid or must you fool most of the people most of the time.

zygurat789

This depends on how far you can forsee.
It was increased as a "money raising exercise" because the government had lots of liabilities, but the tories favour indirect taxes because it hits their supporters less hard so there isn't much chance of them reducing it before they reduce the tax on bankers' boni to less than 50%.
When labour win their next election they will probably try and reduce VAT but who knows when that will be.

InsideInsurance

londonTiger wrote: »

For consumers it's a lot more attractive to buy from the US where there is no sales tax.

Not sure what you mean?

There is state sales tax in the USA rather than federal/ national, though this is typically lower than the UK's VAT.

If you are buying from the USA to be sent here then you dont have to pay the state tax but have to pay both UK VAT and Import Duty subject to the value and type of items you are importing.

Likewise if a person is buying from the USA goods from the UK they dont have to pay the VAT

Randvegeta

InsideInsurance wrote: »

Not sure what you mean?

There is state sales tax in the USA rather than federal/ national, though this is typically lower than the UK's VAT.

If you are buying from the USA to be sent here then you dont have to pay the state tax but have to pay both UK VAT and Import Duty subject to the value and type of items you are importing.

Likewise if a person is buying from the USA goods from the UK they dont have to pay the VAT

What about services and non-tangible goods? Do you have to pay VAT for that?

I deal with a lot of web based services and software, never heard of paying VAT/Import Duty on these when buying from a non EU country.

John_Pierpoint

Software is wonderful, how can HMRC impose VAT and ad valorem duty on it, when it can be downloaded and duplicated in the wink of an eye.
However I do remember being read the riot act for leaving this country of ours with more than £15 in my wallet. I don't think those days could ever return.

Software: You cannot see, it hear it, feel it, taste it - but it smells Banking products the more so .

Don't forget fees for the use of patents, they are a bit a a variable feast like copyright.

mary1949

property.advert wrote: »

You ain't ever seeing 17.5% Vat again but you may well see 22.5% or even 25% within the medium term.


If it gets to 25% we would all have some very serious problems as the government would not get any extra cash in. People would simply stop spending except on essentials like food etc.

If anything they should be cutting it and giving us all a break!

Randvegeta

HI Mary1949, I hardly see the difference in 17.5% and 20%.

If an item cost 100GBP before it cost 102.12 now. A little over 2% increase. Inflation is much more than that. Also, VAT increase doesn't affect necessities like food, public transport, or even utilities.

Do you really think you would be more inclined to spend for a 2% drop in price? I doubt it. 10% Maybe... But fat chance we'll see VAT come down by that much :-).

Regarding software, yes I find it silly. To be perfectly honest, they need to change the whole tax system in order to adapt to the international market's needs.

For example, I use a piece of software developed by a UK company. Since my company is based in HK, it was simple to get around the VAT they would have charged to any EU country. But others may simply choose to buy American and save themselves the 20%.

Here's one stupid thing. This company that develops the software is UK based. So when selling within the EU, they charge the UK's 20% VAT. However, they resell licenses to not EU based countries. So if any of these EU customers wanted to save on that 20%, the could simply buy from a non EU based reseller and avoid the taxes.

Why do I think it is stupid? Simple! Because the EU should be encouraging EU and domestic trade, rather than NEEDLESSLY sending it to international competitors.