Taxation. Would it make sense to...

CLAPTON

chewmylegoff wrote: »

up to 20%? surely every single company in the supply chain would be passing on its prices to the next company up. all of this would get passed on to the end consumer. the impact on the end consumer and/or the economy could be enormous.

yes, good thinking, you are right there
an (up to) 20% turnover tax would be insane although a 40-50% one off increase in inflation would reduce the nations real debt and help people with high mortgages

ILW

pelirocco wrote: »

Its hard enough running a business as it is , i might as well shut up shop.
What exactly do you imagine business expenses to be?

People who have never had the bottle to try and run a business, should refrain from comment in most cases, as they are generally ignorant as to what is involved.

The OP has shown this to be the case.

danothy

JimmyTheWig wrote: »

I think that most people agree that those who can afford to pay more tax than others should do so.

While I don't necessarily disagree with the bolded sentiment, I've yet to hear a valid deterministic argument as to why they 'should'. After all, 'should' indicates that it is an obligation, but the statement, as it stands, lacks the reasoning for this obligation.

N1AK

danothy wrote: »

I've yet to hear a valid deterministic argument as to why they 'should'.

Those with the greatest resources have most to gain from continued stability and a peaceful society. Furthermore providing state services like education, healthcare etc to society as a whole improves the whole economy making everyone, including the people paying more, better off.

There is also an ethical argument for supporting those from poor backgrounds: Individuals do not control the circumstances they are born into thus it is pure luck that decides whether you are born to a King or a destitute abusive alcoholic. If you had to decide how support should be given before the dice was cast and your lot in life determined you would be wise to take slightly more from the wealthiest and give it to those most in need.

ILW

danothy wrote: »

While I don't necessarily disagree with the bolded sentiment, I've yet to hear a valid deterministic argument as to why they 'should'. After all, 'should' indicates that it is an obligation, but the statement, as it stands, lacks the reasoning for this obligation.

I think is is a daft statement.

What has what one can afford got to do with it?

Someone who has run up a lot of debt probably cannot afford much, should they pay reduced taxes?

lovinituk

CLAPTON wrote: »

Obvious the extra costs will be charged to the consumer (just like increases in VAT) so we could look forward to up to 20% increase in prices.

Or not! We have just become VAT registered but can't raise our prices without losing a significant market share so it means that although our turnover has increased, our profit hasn't!

chewmylegoff

lovinituk wrote: »

Or not! We have just become VAT registered but can't raise our prices without losing a significant market share so it means that although our turnover has increased, our profit hasn't!

surely if you can't increase your prices your turnover is down (as you have had to build VAT into your current pricing structure) as turnover is stated net of VAT and your profit is also down.

but in any case, if all businesses suddenly had to pay output VAT but could not claim back input VAT then all businesses are going to be looking to put their prices up at the same time as effectively you have just massively increased taxation on business (well most businesses anyway, a very high margin business whereby turnover was very similar to profit before taxd would probably be better off), but their shareholders still want the same net return.

richbeth

ILW wrote: »

People who have never had the bottle to try and run a business, should refrain from comment in most cases, as they are generally ignorant as to what is involved.

Yes, there seems to be some kind of feeling that every self employed person/business person is out to rip off the taxman.

In my experience the vast majority are honest and will stick within the rules which are much tighter than people seem to think but very complex so it can be easy to trip up.

Also, HMRC are very good at looking at the type of business and its high level financials to work out if anything dodgy is going on. An IT consultant with £90k turnover who tried to claim £60k expenses would have a visit from the VAT man very quickly !

As I see it the main tax benefits of being self employed are
1) you may be classed as working from home allowing you to offset travel/commuting costs against tax
2) you can decide exactly how to use your profit/salary e.g. you may decide in one year that its best to make a large pension contribution to lower your income (which employed people can do) but also to reduce NI contributions (which only some eployers will do).
3) if you have a good year and go over a tax band you can keep some money in the business and pay your self in a bad year when your tax might be at the lower rate.
4) you may be able to get tax relief an items such as tools, mobile phones and computers - exactly what depends upon your business you might be able to offset tax for a van if it's required but cars are very difficult.
5) this is the most controversial one - you may be able to pay yourself a minimum wage salary and dividend rather than take everything as a salary. This reduces your NI and also tax. However in this case the business will pay tax so the saving may be ca 10 % not the 40 % some people seem to think.

Of course you hear the odd story about somebody having a new kitchen put in then getting a recipt for working on their office but this is straight fraud and should be treated as such. There's no need for new taxes or rules to do this.

RB

lovinituk

chewmylegoff wrote: »

surely if you can't increase your prices your turnover is down (as you have had to build VAT into your current pricing structure) as turnover is stated net of VAT and your profit is also down.

We've only just become VAT registered so maybe I haven't quite got my head round it!!

Lets say I sold something pre-VAT reg for £100 and say made pre-tax profit of £30. Now come VAT reg, I can't increase that sale price so still sell at £100 - the VAT I owe on that is £16.66 so my pre-tax profit is now £13.33 (assuming I can't claim any VAT back, which in reality I probably could on the purchase of the stock). So basically I have to sell two and half of those (turnover of £250) to make the same pre-tax profit. Am I wrong?

If you can't increase your sale prices then there is a region between £77000 and £x that means turnover increases but profit doesn't.

chewmylegoff wrote: »

but in any case, if all businesses suddenly had to pay output VAT but could not claim back input VAT then all businesses are going to be looking to put their prices up at the same time as effectively you have just massively increased taxation on business (well most businesses anyway, a very high margin business whereby turnover was very similar to profit before taxd would probably be better off), but their shareholders still want the same net return.

Yes, taxation on us has just been massively increased. The shareholders would love to have the same return but as the shareholders are my wife and I, there isn't going to be anyone else complaining!!

danothy

N1AK wrote: »

Those with the greatest resources have most to gain from continued stability and a peaceful society. Furthermore providing state services like education, healthcare etc to society as a whole improves the whole economy making everyone, including the people paying more, better off.

A good point, but that only highlights that it's in their interest to fund the maintenance. Having a vested interest isn't quite the same as having an obligation.

N1AK wrote: »

There is also an ethical argument for supporting those from poor backgrounds: Individuals do not control the circumstances they are born into thus it is pure luck that decides whether you are born to a King or a destitute abusive alcoholic. If you had to decide how support should be given before the dice was cast and your lot in life determined you would be wise to take slightly more from the wealthiest and give it to those most in need.

The ethical argument of providing some basic need by taking a slice of luxury is mainly the reason I support some form of progressive taxation, but it's highly subjective (as all ethical issues are) and, at least in formal logic, doesn't follow that it 'should' be that way.

ILW wrote: »

I think is is a daft statement.

What has what one can afford got to do with it?

Well a lot of people feel it counts, for various reasons as far as I can tell. Some seem to see a disparity in wealth as inherently unfair of exploitative from the start and taxation as the mechanism for correcting that, others seem to think that a person can be allowed to be rich but only needs to be 'so rich' before others should benefit from their wealth. Others embrace the work-reward concept but see an ethical argument (as above) for taking some luxury from one to provide for the need of another over a natural spread of wealths.

However, there's no logical imperative that moves from an ability to do something to an obligation to do something that isn't subjective in it's nature, so I object to the idea that they 'should' pay more simply because they 'can'. And all the arguments for progressive taxation I've encountered are subjective opinion (even when they are presented as if they were fact, by using words like 'should' etc.).

There is no 'should' when it comes to who pays what tax. Even being 'fair' is somewhat meaningless as there's no real reason that anything should be fair. These things simply aren't axiomatic, that's why they cause arguments.

ILW wrote: »

Someone who has run up a lot of debt probably cannot afford much, should they pay reduced taxes?

I this situation I suppose the view would be that being in debt means they have all ready had the benefit of their future earnings, so whatever tax situation is deemed appropriate for society would still apply to them.