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is vat stuck t 20% fore the forseeable future?

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Comments

  • MeanParent
    MeanParent Posts: 128 Forumite
    edited 24 February 2012 at 7:41PM
    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.


    No it doesn't it comes from general payments from member countries. How those member countries want to generate funds to pay for the EU budget is up to them.

    For example in 2010 the UK paid £9.2bn whilst VAT generated £83.8bn to the UK exchequer.
  • Randvegeta wrote: »
    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.

    Yes but the rise in tax is equivalent to a 14.3% increase!
  • True, the rise in tax is 14.3%, but really it makes little difference.

    As I said, would 2% reduction in price really make all the difference?

    If an item cost £10.20 in 1 store, and £10 in another, are you really going to be all that bothered to go to the other store to get it cheaper?

    Does anyone really need that £0.20 so badly?

    Let's look at it from this way.

    If someone spends £1,000 /month on goods that VAT applies (which means NOT food, rent, utilities), the difference is less than £20.

    Tell someone they get a £20 pay rise, and I doubt they will see any real difference.

    Perhaps I have different appreciation for this small change. I typically bring my overseas money into the UK and I must deal with a number of factors such as 2-3% currency conversion fee, as well as the fluctuation in currency exchange which may very well be another 2%. So for me, a price reduction of just 2% would make virtually no difference.

    On the other hand, if you buy 200 litres of petrol a month, and you've seen prices go increase some 10p+ per litre every year,then that's an extra £20 you have to part with every month compared with the previous year.

    VAT, I see as nothing. Petrol is the real killer! But thats just me.
  • Randvegeta wrote: »
    True, the rise in tax is 14.3%, but really it makes little difference.

    As I said, would 2% reduction in price really make all the difference?

    If an item cost £10.20 in 1 store, and £10 in another, are you really going to be all that bothered to go to the other store to get it cheaper?

    Does anyone really need that £0.20 so badly?

    Let's look at it from this way.

    If someone spends £1,000 /month on goods that VAT applies (which means NOT food, rent, utilities), the difference is less than £20.

    Tell someone they get a £20 pay rise, and I doubt they will see any real difference.

    Perhaps I have different appreciation for this small change. I typically bring my overseas money into the UK and I must deal with a number of factors such as 2-3% currency conversion fee, as well as the fluctuation in currency exchange which may very well be another 2%. So for me, a price reduction of just 2% would make virtually no difference.

    On the other hand, if you buy 200 litres of petrol a month, and you've seen prices go increase some 10p+ per litre every year,then that's an extra £20 you have to part with every month compared with the previous year.

    VAT, I see as nothing. Petrol is the real killer! But thats just me.

    But in the grand scheme of things it does make a difference. £20 a month is £240 a year. Thats a weekend away not taken! So shops and hotels etc suffer.

    VAT take is £80 odd billion. If it went up 2.5% / in real terms 13% then it would generate an extra £10 billion. That money out of peoples pockets does impact ordinary people!
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 25 February 2012 at 5:38AM
    MeanParent wrote: »
    No it doesn't it comes from general payments from member countries. How those member countries want to generate funds to pay for the EU budget is up to them.

    For example in 2010 the UK paid £9.2bn whilst VAT generated £83.8bn to the UK exchequer.

    Needless to say, like most things that involve the EU (and national states) when it comes to taxation, the answer is complex and obscure. It might be understood by taxation nerds working for the commission, but the average tax payer hasn't a clue.

    From Wikipedia:
    Traditional own resources

    Traditional own resources[6] are taxes raised on behalf of the EU as a whole, principally import duties on goods brought into the EU. These are collected by the state where import occurs and passed on to the EU. States are allowed to keep a proportion of the revenue to cover administration (25%). The European Commission operates a system of inspectors to investigate the collection of these taxes in member states and ensure compliance with the rules. The effect of a state failing to collect these taxes is that other states will have to contribute more to the budget, so there is a potential conflict of interest on the part of the collecting authorities. Countries are liable to make good any loss of revenue due to their own administrative failure.[6]
    URL="http://en.wikipedia.org/w/index.php?title=Budget_of_the_European_Union&action=edit&section=8"]edit[/URL VAT based own resources

    VAT based own resources[6] are taxes on EU citizens derived as a proportion of VAT levied in each member country. VAT rates and exemptions vary in different countries, so a formula is used to create the 'harmonised tax base', upon which the EU charge is levied. The starting point for calculations is the total VAT raised in a country. This is then adjusted using a weighted average of VAT rates applying in that country, producing the intermediate tax base. Further adjustments are made where there is a derogation from the VAT directive allowing certain goods to be zero-rated. The tax base is capped, such that it may not be greater than 50% of a country's Gross national income (GNI). The EU applies a call-up rate to the tax base, generally of 0.33%, but this is varied for some countries. For 2007–2013 the rate proposed for Austria is 0.225%, and Germany 0.15%, the Netherlands and Sweden 0.1%. Countries are required to make an account of VAT revenues to the EU before July after the end of the budget year. The EU examines the submission for accuracy, including control visits by officials from the Directorate-General for Budget and Directorate-General for Taxation, and reports back to the country concerned. The country may then respond to any issues raised in the report, and negotiations continue until both sides are satisfied, or the matter may be referred to the European Court of Justice for a final ruling. The Advisory committee on own resources, which has representatives from each member state, also receives and discusses the reports. In 2006, 9 countries were inspected by controllers, including 5 new member states who were participating in the procedure for the first time. It is anticipated that 11 countries will be visited in 2007. The EU may be working on figures for three years at any one time.
    URL="http://en.wikipedia.org/w/index.php?title=Budget_of_the_European_Union&action=edit&section=9"]edit[/URL GNI based own resources

    GNI based own resources[6] currently forms the largest contribution to EU funding. A simple multiplier is applied to the calculated GNI for the country concerned. This is the last recourse for raising funding for a budget year, so the actual figure is adjusted within predetermined limits to obtain the budget total required. Revenue is currently capped at 1.27% of Gross national income in the European Union as a whole. GNI for own resource purposes is calculated by national accountants according to European law governing the sources and methods to compile GNI and the transmission of GNI data and related methodological information to the Commission (Eurostat). Basic information must be provided by the countries concerned to Eurostat before 22 September following the budget year concerned. Eurostat carries out information visits to the National Statistical Institutes forming part of the European Statistical System. Based on assessment reports by Eurostat, the Directorate-General for Budget (DG BUDG) of the Commission may notify to the Permanent Representative of the Member State concerned required corrections and improvements in the form of reservations on the country's GNI data. Payments are made monthly by member states to the commission. Own resources payments are made monthly as they are collected, but monthly installments of VAT and GNI based returns are based upon the budget estimates made for that year, subject to later correction.
    URL="http://en.wikipedia.org/w/index.php?title=Budget_of_the_European_Union&action=edit&section=10"]edit[/URL Other Revenue

    Other Revenue[6] makes up approximately 1% of the EU budget
    http://en.wikipedia.org/wiki/Budget_of_the_European_Union

    When it come4s to raising the budget having a tax based on a small percentage of GNI (how do you calculate that in Italy & Greece?) is more more comprehensive than adding another small percentage to VAT.

    Now would someone like to explain "The Barnett Formula"?



    http://en.wikipedia.org/wiki/Barnett_formula
  • MeanParent wrote: »
    No it doesn't it comes from general payments from member countries. How those member countries want to generate funds to pay for the EU budget is up to them.

    Only to an extent.

    http://en.wikipedia.org/wiki/European_Union_value_added_tax
  • MeanParent wrote: »
    But in the grand scheme of things it does make a difference. £20 a month is £240 a year. Thats a weekend away not taken! So shops and hotels etc suffer.

    VAT take is £80 odd billion. If it went up 2.5% / in real terms 13% then it would generate an extra £10 billion. That money out of peoples pockets does impact ordinary people!

    You may be right. I just don't feel the difference, but that's just me.

    I live quite modestly and probably spend around 300 a month on 'luxuries' that carry the high rate of VAT. My monthly expenses barely surpass 1,100 so for me, the VAT increase makes only a 6GBP (0.55%) difference. That really is insignificant to me.

    On the other hand, I look at other things like, food and petrol go up enormously. This may be a silly example, but just 2 weeks ago I could buy from Tesco, 500g of tomato passata for 30p. Now its 48p! Since I buy about 8 of these every month, I've just seen my food bill go up by at least 1.44 /month from JUST tomatoes! And this seems to be happening across the board. All food prices are increasing, and at a rate which seems to be higher than inflation. Another example, the cheapest minced beef last year was 97p for 400 grams. Now it is 1.25.

    Since most of my money is held in foreign currency, and the pound is pretty weak, I feel the squeeze much less, but I can only imagine how people who earn in GBP feel.
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