From The Times (while it's still 'free'):
Sir, Despite his record of directorships, I struggle to believe that Kit Malthouse has ever been in business or knows anyone who has been (Away with tax! Abolish the lot (except one), Opinion, April 6).
I was a shopkeeper from the late 1970s to the mid-1990s. Throughout that economic rollercoaster period, the worst thing inflicted on my small business was the increase of VAT from 8 per cent to 15 per cent in 1979 and later to 17.5 per cent, purportedly balancing out the drop of the top rate of tax from 83 per cent to 60 per cent.
The psychological impact on consumers of this shift of taxation from income to expenditure far outweighs the revenue-neutral “big picture”.
People can avoid VAT by not shopping. This may be good for their pockets on a temporary basis. It might even be considered an unqualified good by a quasi-religious dirigiste Marxist, but it is fundamentally anti-capitalist and bad for the economy as a whole in the medium to long term.
Richard Cooper, Gosport, Hants.
Although Mr C assumes that 'consumers' bear the tax in the first instance, it must be pretty clear that there is a subsequent knock-on effect on economic activity and thus on 'businesses' (the distinction between 'consumer' and 'business' being highly artificial anyway); unless wages are increased (driving profits down further), the effect of hiking VAT must be to reduce the net turnover of VAT-able businesses by the amount of the hike.
Entertainment – The Ghost of the Machine
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7 comments:
Measure One - eliminate VAT.
Hmmm,
There have never been so many shopping temples. People have never had so many things they don't need in their homes :)
Most of the increase has occurred since VAT was introduced. In fact the fastest increase has occurred since VAT was subsequently raised LOL
Following Richards logic perhaps it should be even higher LOL
Hint to Richard his temple probably wasn't sheltered enough and probably wasn't sufficiently grand enough to inspire shoppers ultimate desire for fulfillment.
Anon "People have never had so many things they don't need in their homes"
That's what we called Marxism, deciding what people should buy or not. In any event, this is also what the Home-Owner-Ists always say: 'ooh look at those naughty consumers buying flat screen TVs' (which cost a few hundred quid), while merrily expecting people to pay about £100,000 over the odds for a house to put them in.
That's what we called Marxism, deciding what people should buy or not
It's not a case of choosing for people.
If you go into many homes the garages, sheds, lofts, spare rooms etc are often filled with items that have been seldom used or are unlikely to be ever used. And most likely to be thrown away or sold for a pittance.
That is not to say that it is wrong or right rather an observation.
Now if VAT doesn't [or shouldn't] fall on essentials like food etc. and given all Taxes have negative impacts for supply, VAT
seems to me to be a pretty sensible place to levy a tax - at the point of desire.
As for example:
As opposed to the current plans to levy an NI increase which will target 100% the cost at the labour element cost of supply rather than the total cost of supply.
while merrily expecting people to pay about £100,000 over the odds for a house to put them in.
You're allowing your politics to influence your objectivity. The homeownerists don't set the price.
Well not if they need [or want] to complete a transaction.
The price is set by the market. Price above cost is predominantly influenced by the availability of credit, and the ability to service that debt.
Many of those homeonerists are not really homeonerists; the Banks are the owners and the homeownersists are effectively rentists.
Now the real owners have an incentive to main prices because the more the prices rise the more their businesses flourish. The only thing that spoils there growth plans is lower prices.
A minority of homerownerists are truly able to realise their gain. For most it is illusory as the gain is not enough to buy in again so they will need [expensive] additional funds because the market as a whole rises.
Anon, in among the myths that you appear to believe and wish to perpetuate is this nugget:
"The homeownerists don't set the price."
Of course they don't set the exact price, but they inflate it as far as possible, by
* restricting planning;
* selling off council housing at undervalue and not replacing it;
* bailing out banks and creating cheap credit;
* subsidies to private landlords (Housing benefit);
* forever reducing taxes on land values and hiking taxes on other things (like hiking VAT, for example).
Perhaps you are confusing an individual 'homeowner' (somebody who owns a house and lives in it) with the broader Home-Owner-Ist coalition, which has government, banks, landowners, landlords and NIMBYs at the helm.
Small 'h' homeowners are tricked into thinking they are getting a good deal (which is why they vote for the Home-Owner-Ist Parties at elections) when by and large they are not (for the reasons you explain, for example).
Perhaps you are confusing an individual 'homeowner' (somebody who owns a house and lives in it) with the broader Home-Owner-Ist coalition, which has government, banks, landowners, landlords and NIMBYs at the helm.
Indeed - my perception of "homeownerist" had always been of individual self interest
rather than a wider coalition of [or simply aligned] vested interests.
Anon, correct 'Home-Owner-Ism' is this weird prevailing economic philosophy whereby ordinary homeowners (and there is nothing wrong with owning your own home) are duped into electing governments who offer them scraps from the table (at a huge cost to said homeowners - there's no such thing as a free lunch), while the government, bankers, landlords, landowners etc rake in the real money. The NIMBYs do it out of sheer spite and stupidity, I guess.
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