People don't look at tax cuts right Watch

Captain Haddock
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#21
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#21
(Original post by Quady)
Well it does, but its a quarter of the standard rate.

I'd have thought with extra income you'd be a better consumer, attracting more standard rated VAT goods.

Buying that 60" TV and all that.
Well remember that the figures I gave only include the top and bottom fifths. The middle 3 fifths could well be paying more than either of them.
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Quady
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#22
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#22
(Original post by Captain Haddock)
Well remember that the figures I gave only include the top and bottom fifths. The middle 3 fifths could well be paying more than either of them.
Well that wouldn't be especially regressive :/

NI is a much more regressive tax IMHO and has for council tax...
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poohat
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#23
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#23
(Original post by TorpidPhil)
Yep. I agree. VAT disproportionately detriments the poor yet they seem unaware of this.
This is a myth; most of the money that poor people spend comes from government benefits (whether in-work, or out-of-work) and the level of benefits is chosen to take living costs into account, which includes the cost of paying VAT. Yes the poor are technically paying VAT but what is really happening is that the government is giving them a large sum of money through the benefit system and taking some of it back through VAT - and the size of benefits they are given takes this account. You could argue that this is bureaucratically inefficient but it isnt hurting poor people - most of the money they are spending isnt "their" money anyway, and if VAT didnt exist then they would be given less benefits to compensate (since living costs are lower)

Most economists agree that sales taxes are more efficient than income tax, because they cause less market distortion.
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Rakas21
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#24
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#24
Never been a fan of VAT myself. While i can see the arguments for it (it's indirect, it's pay as you go rather than on everybody regardless of consumption) i don't like the fact that we are actively taxing a component of aggregate demand. Certainly at the low end i think that demand is elastic enough that a fall in VAT would produce increased consumption.

That being said neither Labour nor the Tories are remotely ambitious enough to radically overhaul the tax system so a freeze at 20% for the next parliament is the next best thing as there's still cuts that can be made elsewhere.
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