Outbreak of commonsense ... at the EU?

I have long argued that VAT, especially VAT on services, and Employer's National Insurance are The Worst Taxes. Politicians like to palm these off as being 'taxes on consumption' and 'employers' contribution towards social security' rather than being 'taxes on production', but this is arrant nonsense.

The maths is quite simple. Assuming the employer needs to make a profit margin of 20% to cover his overheads and make a modest profit, for every £100 gross salary paid out (of which the employee nets £69), the employer has to charge £166 inclusive of VAT.* The combined effects of these two taxes set an incredibly high hurdle - any business that can't make that sort of margin falls by the wayside.

Via Christina Speight comes this bombshell: "EU executive unveils reduced sales tax proposal". Yes, they are still making it all far too complicated, but hey, it is a teensy-tiny step in the right direction!

Maybe somebody got round to reading the research prepared for the ECB? See page 19 of this.

* £100 gross salary plus 12.8% Employer's NI = £112.80, plus profit margin £28.20 = £141, plus 17.5% VAT = £166. Without these two taxes, the business would be profitable if they can charge a final price of £120.