From Citywire:
Economists told MPs that a VAT hike would be well received by the City as it would be a transparent, measurable move to cut the country's growing debt pile and would remove uncertainty.
Asked whether the market would prefer a big VAT hike 'nice and early' both Alan Clarke, economist at BNP Paribas and Simon Hayes, chief UK economist at Barclays Capital said they thought the market would welcome such a move.
Hayes told the Treasury Select Committee: 'I think that would be taken very positively by the financial markets. The attractive thing at the moment about tax increases is that they are straightforward. They can be pre-announced. They are credible and you can have a reasonably fair idea about how much money they will raise,' he said.
Yup.
These 'economists' work for banks, of course, and they follow The Golden Rule that the best tax is one that somebody else has to pay. Remember that banking, finance and insurance are largely exempt from VAT, as are house prices or residential rents. Residential new builds are zero-rated (so no VAT to pay by builder can reclaim input VAT).
So to Hell with the productive economy which has to generate all the VAT, let them pay the extra tax to keep the credit and house price bubbles going and keep the City boys in champagne and Ferraris, eh?
H/t Mark at HPC.
Virtuous can-kicking
3 minutes ago
7 comments:
Why not scrap VAT and replace it with a higher tax on petrol and diesel, a very high tax on the Toyota Prius, and a tax on burials and cremations? Oh, and on footballers and their transfers. Oh, oh, and on fucking pop music.
D, I take it you're following The Golden Rule - you'd like to see higher taxes on things that you don't spend much money on?
I did put in a plug for a real "Death Tax". I'd negotiate on the rest, bar the fucking pop music.
But at least they'll have to pay VAT on their Champagne and Ferraris, won't they?
Anon, true, but the producers of champagne and Ferraris have to absorb about half the VAT out of their own profit margin, so it's still win-win for the City boys.
Would I be right in thinking that if you want to see whom the government thinks are jolly good chaps, you only have to look at those sectors of the economy who pay no VAT?
B, to be fair, it was the French and Germans who dreamed up VAT - so farm produce has to be exempt to keep the French farmers happy, and it has to act like an import duty/export subsidy to keep the German manufacturers happy.
But VAT fits in nicely with the Home-Owner-Ist philosophy in the UK as well, which is presumably why all UK politicians have been busily misdescribing it as "a tax on consumption" ever since, although it is in fact a tax on production and a subsidy to banking, landownership and homeownership etc.
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