Is raising VAT silly?

[groak]

If economic recovery is stagnating at best and collapsing back to recession at worst isn't increasing VAT to 20% a bit of a silly thing to do?

[Elroy Blue]

Massive deficit that has to be repaid. It's got to ocme from somewhere. I actually think VAT is one of the fairer taxes. You can choose to pay it or not (in that you decide if you buy something). As long as it doesn't go on food, I can stomach it.

[Randy Winkman]

What if people buy less stuff? They'd only have to buy a tiny bit less and the rise becomes pointless.

[groak]

Elroy Blue said:

I think VAT is one of the fairer taxes. You can choose to pay it or not.

Goodness! There was me pissed off about having to send HMRC a huge BACS transfer tomorrow, and all the time it's been VOLUNTARY!! (I bloody wish)

[Sticks.]

In theory if it was on 'optional' spending then an increase could see revenue go down as people opt not to buy or delay purchases. In pracice it's on essential things so it's likely to reduce spending while increasing inflation at the same time. If infation increases, interest rates will follow, mortgages up, people tighten their belts.

Apart from that, and proportionately costing lower income families more, it's a great idea. But it's popular because all parties see indirect taxation as less politically damaging.

[Elroy Blue]

groak said:

Elroy Blue said:

I think VAT is one of the fairer taxes. You can choose to pay it or not.

Goodness! There was me pissed off about having to send HMRC a huge BACS transfer tomorrow, and all the time it's been VOLUNTARY!! (I bloody wish)

Speaking as an employee, which the vast majority are. You can choose whether you want to buty a new TV/Car etc. If income tax/national insurance goes up, then you've absolutely no choice.

[Shaw Tarse]

I expected that VAT would rise to 20% to compensate for when it was dropped to 15%

[NoelWatson]

groak said:

Elroy Blue said:

I think VAT is one of the fairer taxes. You can choose to pay it or not.

Goodness! There was me pissed off about having to send HMRC a huge BACS transfer tomorrow, and all the time it's been VOLUNTARY!! (I bloody wish)

Don't you pay electronically these days?

[Engineer1]

groak said:

Elroy Blue said:

I think VAT is one of the fairer taxes. You can choose to pay it or not.

Goodness! There was me pissed off about having to send HMRC a huge BACS transfer tomorrow, and all the time it's been VOLUNTARY!! (I bloody wish)

But unless you are over the threshold as a company it is voluntary, and over the threshold it is really VAT that you have been kind enough to collect for the government unpaid, you did benefit from the interest on it till you pay it to HMRC.

[Tsippy]

If VAT goes up people will buy less to compensate, causing shops to make less money, leading to redundancies to maintain profits.

I think it'd be crazy, and if the government want to save money I'd rather see cuts / efficiency drives to the public sector and benefits system before they come raping me for more of my hard earned cash.

[fido]

Randy Winkman said:

What if people buy less stuff? They'd only have to buy a tiny bit less and the rise becomes pointless.

I make it about (20 / 17.5 - 1) = 14% less .. that's more than a tiny bit.

As said before, it's either VAT, Income Tax or Corporation Tax - the last one would be economic suicide. Of the first two i would prefer VAT, coupled with some protection for those on lower incomes.

[Victor McDade]

I'd like to see if any studies have been done on the relationship between increasing sales tax and decreasing sales volume. Maybe it's just me but as a consumer I didn't change my spending habits when VAT went down to 15% nor will I do so when it rises to 20%. An extra £25-30 on some luxury goods is negligible.


Will the increase in VAT really make a significant difference on sales? Would the Laffer curve apply to something like VAT?

[tonym911]

It's the wrong target at the moment IMO, we should be urgently concentrating on ways to help businesses (and manufacturing businesses in particular) grow. That's got to be the driver of any recovery. Any resulting business growth probably won't immediately help people to buy more goods at whatever the VAT rate is, as any employers happy to take on more people won't be paying big wages. It's a period of pain we've got to go through to get back to something like the prosperity we used to have. Hopefully next time around the prosperity will be built on something a bit more solid.

[Balmoral Green]

I can't see it making much of a difference. I sell some big ticket items at £15,000 or so, and a few potential customers are raising the issue. But when they've worked it out, on something that costs £15,000 it makes £319 difference. Not as much as you might think, and not enough to have any noticeable effect on a buying decision at that level.

[groak]

It's just another kick in the balls for people whose balls are sore already.

Personally I preferred the Brown approach to economic crisis. Artificially anaesthetise until solution is found or arrives naturally. Like giving someone in pain morphine till the problem causing the pain is sorted.

But the VAT thing is simple really. The poorer you are the more negatively it'll impact on you.

[Puggit]

I hate VAT - it's double taxation.

I pay 40% tax on my income, only to pay 1/6 of a purchase price on goods as tax as well

Having said that - the chavs pay VAT as well, mostly...

[NoelWatson]

groak said:

Personally I preferred the Brown approach to economic crisis. Artificially anaesthetise until solution is found or arrives naturally. Like giving someone in pain morphine till the problem causing the pain is sorted.

The economy is not Jack Bauer.

[m3jappa]

It won't make any difference imo, like mentioned above an extra 2.5% makes literally no difference, on items like tv's your talking an extra £30 or so which if your spending £400 or so imo makes no odds.


I would like to see income tax scrapped completly and vat raised to something like 27.5% much much fairer, no one evades tax, everyone feels better off, everyone spends more, everyone wins. I really do wonder how that would work and if it would add up, any party which did that would be in power for a long time i reckon.

[Mattt]

groak said:

Personally I preferred the Brown approach to economic crisis. Artificially anaesthetise until solution is found or arrives naturally. Like giving someone in pain morphine till the problem causing the pain is sorted.

Of course not facing up to reality is better, but it's hardly sensible or sustainable.

[groak]

Mattt said:

groak said:

Personally I preferred the Brown approach to economic crisis. Artificially anaesthetise until solution is found or arrives naturally. Like giving someone in pain morphine till the problem causing the pain is sorted.

Of course not facing up to reality is better, but it's hardly sensible or sustainable.

So bank bailouts, QE, scrappage scheme, VAT lowering etc etc etc wasn't sensible ? Maybe yes, maybe no, but it seems a lot more sensible to me than increasing VAT and unemployment in a fragile economy.