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Should VAT be reduced to 15% Watch

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    (Original post by paul514)
    There is tax on insurance it's something like 10% of what you pay


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    ok, i didn't know that. I agree there should not be tax on insurance.
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    The ideological shift towards higher VAT but lower income tax came from the Thatcher government.

    The argument was we should move away from pay-as-you-earn and move towards pay-as-you-spend.

    As VAT is almost impossible to avoid (legally) it means that those in society that consume the most, pay the most back in to society.

    The argument does have logic.
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    Yes, but with getting rid of all the exemptions


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    (Original post by MagicNMedicine)
    The ideological shift towards higher VAT but lower income tax came from the Thatcher government.

    The argument was we should move away from pay-as-you-earn and move towards pay-as-you-spend.

    As VAT is almost impossible to avoid (legally) it means that those in society that consume the most, pay the most back in to society.

    The argument does have logic.
    It doesn't have merit at all.

    Everyone has to eat, everyone who owns a car has to buy fuel.

    Rich or poor.

    Think how much further the minimum wage, benefits and the people on the average salary's money would go if all personal tax was removed and income tax was hiked to the appropriate level (whatever that level may be) to make up for the short fall.


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    (Original post by RedManc)
    A cut in VAT would make products cheaper, and it will encourage people to spend more money.
    I'd rather it stay as it is and other taxes be cut. It seems fairer than a lot of other taxes like scaled income taxes and has a less painful impact than something like the Capital Gains Tax.
    (Original post by RedManc)
    I do not know why the Government raised it in the first place. During the recession it was 15%
    I thought it was 17.5? Could be wrong though.
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    (Original post by MagicNMedicine)
    The ideological shift towards higher VAT but lower income tax came from the Thatcher government.

    The argument was we should move away from pay-as-you-earn and move towards pay-as-you-spend.

    As VAT is almost impossible to avoid (legally) it means that those in society that consume the most, pay the most back in to society.

    The argument does have logic.
    Except you disproportionately hurt the poor more than the rich since the proportion of their income that they save is negatively correlated with how much you earn.

    this is bad for numerous reasons.

    You discourage income redistribution and thereby end up over time having all of your finances based around certain pockets of the country. Income inequality is never a good thing. The poorest being made more poor by these sorts of flat-taxes on their income (since they have no choice but to spend nearly all of it) makes them more susceptible to illness, less likely to do thins like buy healthy food blah blah blah. It just has lots of negative effects on society economically, nevermind morally.

    I also suspect that with the exception of actual business investment, money spent by those who are better off tends to have less real value for an economy - more luxury items and not things that actually improve the quality of a society. Economists too often just care about blunt GDP figures, but really it's rather meaningless since not all £s are equal for an economy at all.

    That should we shouldn't abolish it only lower it. As someone said before having multiple means of taxation is nice so that if one goes awry you have more. And you can more easily make changes to balance the books without shocking the entire financial market. Imagine if we just had income tax at 60% and the govt wanted to raise it to 62% there would be such an out-roar! But if we make a sneaky change to corporation tax, inheritance tax and national insurance, while lowering income tax a bit and raising VAT a bit to compensate... you avoid that problem.

    Also of course if you just have income tax you encourage people to do self-employed work or otherwise tax avoid. And if you just have high VAT you encourage black markets for goods.
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    (Original post by jape)
    I'd rather it stay as it is and other taxes be cut. It seems fairer than a lot of other taxes like scaled income taxes and has a less painful impact than something like the Capital Gains Tax.


    I thought it was 17.5? Could be wrong though.
    How is our income tax system in anyway not fair???

    A flat % of your income regardless of what it is is not fair at all.
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    I'm torn. On the one hand, I'm in favour of reducing taxation for the sake of it (people deserve to get what they earn and work for far more than any third party). On the other hand, taxing consumption is the least intrusive form of taxation.

    Optimally, I'd be in favour of keeping VAT as it is and drastically reducing other taxes (income, capital gains, etc).

    But if that's not possible yes I'm in favour of reducing VAT to Texan levels.
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    (Original post by jape)
    I'd rather it stay as it is and other taxes be cut. It seems fairer than a lot of other taxes like scaled income taxes and has a less painful impact than something like the Capital Gains Tax.


    I thought it was 17.5? Could be wrong though.
    It was 17.5% before the recession. Alistair Darling then reduced it to 15% for 11 months, and then raised it back up to 17.5%.
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    (Original post by yunglife)
    I know right! This is what really pisses me off about this country,

    Everything here is so so expensive. The houses, the bills, the shopping - its all so expensive yet our US counterparts or even Australian counterparts get it way cheaper.

    Recently went to Tommy Hilfigers outlet store in the states and got a polo and a shirt for around $80 USD. Is about £50 which is really cheap. Would get a slap if I asked for the same prices from an outlet store here
    Things tend to be cheaper in the US because it is a much larger market, but Australia is actually more expensive than the UK due to lack of competition amongst other things
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    (Original post by jape)
    I'd rather it stay as it is and other taxes be cut. It seems fairer than a lot of other taxes like scaled income taxes and has a less painful impact than something like the Capital Gains Tax.


    I thought it was 17.5? Could be wrong though.
    https://www.theguardian.com/business...istairdarling1
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    (Original post by TorpidPhil)
    Except you disproportionately hurt the poor more than the rich since the proportion of their income that they save is negatively correlated with how much you earn.

    this is bad for numerous reasons.

    You discourage income redistribution and thereby end up over time having all of your finances based around certain pockets of the country. Income inequality is never a good thing. The poorest being made more poor by these sorts of flat-taxes on their income (since they have no choice but to spend nearly all of it) makes them more susceptible to illness, less likely to do thins like buy healthy food blah blah blah. It just has lots of negative effects on society economically, nevermind morally.

    I also suspect that with the exception of actual business investment, money spent by those who are better off tends to have less real value for an economy - more luxury items and not things that actually improve the quality of a society. Economists too often just care about blunt GDP figures, but really it's rather meaningless since not all £s are equal for an economy at all.

    That should we shouldn't abolish it only lower it. As someone said before having multiple means of taxation is nice so that if one goes awry you have more. And you can more easily make changes to balance the books without shocking the entire financial market. Imagine if we just had income tax at 60% and the govt wanted to raise it to 62% there would be such an out-roar! But if we make a sneaky change to corporation tax, inheritance tax and national insurance, while lowering income tax a bit and raising VAT a bit to compensate... you avoid that problem.

    Also of course if you just have income tax you encourage people to do self-employed work or otherwise tax avoid. And if you just have high VAT you encourage black markets for goods.
    Actually that uproar is useful as it makes voters actually think about what they want their tax to be spent on instead of moaning about cuts none stop.

    Also all of that kind of black market trade for cash could be gone if you simply removed cash from the economy to a electronic fund transfer when buying goods. As far as I can see in 2017 we have no reason to need have cash.


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    (Original post by RedManc)
    It was 17.5% before the recession. Alistair Darling then reduced it to 15% for 11 months, and then raised it back up to 17.5%.
    I stand corrected - fair enough.
    (Original post by TorpidPhil)
    How is our income tax system in anyway not fair???

    A flat % of your income regardless of what it is is not fair at all.
    It's almost the definition of fair. Whether you think it's effective, or whether it's going to impact other people to the extent that it isn't viable, is a different question. But it isn't unfair.

    As far as it goes, I don't think a flat tax is viable and I wouldn't seriously advocate one. I was more thinking about the 40/45/50% tax rates that we place on the top strata of the progressive tax subjects in this country.
 
 
 
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