James Barlow emailed me a link to this.
Idiots. Notwithstanding that VAT is The Worst Tax*, some 'economist' is quoted as saying:
"We believe that raising VAT from its current rate of 17.5 to 19 per cent would make ...a significant contribution to the black-hole in the government’s budget forecast..."
No it wouldn't.
Current VAT revenues about £80 billion x 19/17.5 = £87 billion, which looks like an extra £7 billion, but a higher VAT rate depresses corporate profits and salaries, so you can knock off a third straight away = £5 billion, and a higher rate will push marginal businesses over the edge, so knock off another £1 billion = £4 billion.
Which is hardly "a significant contribution" when compared to a current annual deficit of £160 billion (or whatever the figure is).
* Arguably, Employer's NIC is just as bad, but revenues from private-sector Employer's NIC are 'only' £40 billion, i.e. half as much as VAT, and the base for Employer's NIC is much broader (banks and food producers have to pay it as well, but they don't have to pay a supertax on gross profits, i.e. VAT) and the rate is lower.
Monday, 26 April 2010
More VAT Fun
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5 comments:
face/palm
Looking at Azad Zangana’s linkedin page, his career includes five years at HM Treasury as an economist,
ah that might explain it.
It's so depressing that none of them think of invooking Laffer, slash taxes and watch the tax take rocket.
Apparently 330,000 civil 'servants' leave the public payroll each year. Zero recruitment for 4 years equates to 1,320,000 off the taxpayers payroll. Say £30,000 per employee that's a permanent reduction of about £39.6Bn per annum. I mean, how hard can it be?
but a higher VAT rate depresses corporate profits and salaries, so you can knock off a third straight away
The public is not meant to see that.
This smacks to me of pure laziness; don't bother to do any analysis, just slap an extra 1.5% on an existing tax.
"Apparently 330,000 civil 'servants' leave the public payroll each year."
But how many leave simply to join a quango?
It's really disheartening when Labour is down, another left-wing party is up. This poll shows that Lib Dems are actually leading by 10%:
www.10downingtweets.co.uk
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