Eliminate tax on income and profits

Legacy_user

The government could in theory eliminate income tax , NI and profit tax, and just allow the extra spending to boost vat income and property prices (and thus rental tax and stamp duty)

But eliminating vat instead to increase income tax reciepts wouldn't hold with increasing automation

Dan83

We shouldn't pay VAT anyway!

We pay TAX when we earn money then pay VAT when we spend it!

unforeseen

MatthewAinsworth wrote: »

But eliminating vat instead to increase income tax reciepts wouldn't hold with increasing automation

While we are part of the EU we are stuck with the current VAT system whether you like it or not.

If we come out of the EU then it will probably change its name to something catchy like Purchase Tax snd nothing will change

System

I think vat allows tax to be reclaimed from peoples tax free allowances and any benefits, in doing so I suppose it allows the government to afford to hand out more - rob later to pay paul

HappyMJ

MatthewAinsworth wrote: »

I think vat allows tax to be reclaimed from peoples tax free allowances and any benefits, in doing so I suppose it allows the government to afford to hand out more - rob later to pay paul

I would assume people on benefits wouldn't have enough money to spend on purchases subject to VAT. At least not much is spent on VAT. Gas and electric is one the few that can't be avoided but it's only 5% VAT and people on benefits get a £140/year Warm Home Discount offsetting the VAT payable.

System

In theory they shouldn't, but I think they do have disposable income at present benefit level, or they could skimp on food quality in order to buy taxable items. I suppose feminine hygiene products is a classic thing that shouldn't be taxed but is

Bigphil1474

You are assuming that people would spend the extra money they would have by not paying Income tax et al. Some may, but many may not. If it's saved, and there's no tax on income from savings as well, then there would be a longer term wait to reap the extra spending effect. Plus, there would be additional inflationary pressure if it is spent, which could mean prices go up, so we don't necessarily have the same spending power that releasing the tax would imply. I don't know the figures on VAT income and stamp duty, but I'd be surprised if they were anything like the same as 30 million people paying at least 32% tax on income above the tax free allowance (Income tax plus NI). I own my house, but there has been no tax paid related to my house ownership for over 20 years, because I haven't moved.
Your idea would be akin to the government gambling on potential future 'income' against known current 'income' which would be a nonsense when trying to plan public spending on services that are provided locally or nationally and require medium and long term investment.

System

Perhaps then the opposite extreme, eliminate VAT and replace with higher income tax?

Mobeer

MatthewAinsworth wrote: »

Perhaps then the opposite extreme, eliminate VAT and replace with higher income tax?

We can't eliminate VAT, it would be against the EU rules:
https://en.wikipedia.org/wiki/European_Union_value_added_tax

System

MatthewAinsworth wrote: »

extra spending to boost vat income and property prices (and thus rental tax and stamp duty)

Isn't rental tax actually income tax?

c-m

Mobeer wrote: »

We can't eliminate VAT, it would be against the EU rules:
https://en.wikipedia.org/wiki/European_Union_value_added_tax

No, we'd have to have a relationship like Monaco instead, based on agreements.