More reasons to hate VAT

OK, let's gloss over the facts that:

1. The tax is imposed by the EU;

2. That it was cooked up by an unholy alliance of German mercantilists (which is why exports are zero-rated but imports are VAT-able) and French farmers (which is why food is zero-rated, exempt or taxed at lower rates).

3. That the UK Home-Owner-Ists embraced it with a vengeance (because sales or lettings of residential housing and banking are exempt). Bizarrely, new residential construction is zero-rated, but the NIMBYs have worked out how to block that.

4. That is costs us one or two million jobs.

5. That it's a tax on gross profits (the clue is in the name), in other words, if you scrapped the tax and just hiked Employer's NIC and corporation tax to 30.3% and 45.5% respectively for Non-Righteous Businesses and non-land based businesses, the total tax take would be much the same and it would be the same businesses paying it.

... what really hacks me off is the sheer and utter smug Self-Righteousness of it all.

Imagine a normal conversation, you ask somebody what they do for a living and they reply they are a hairdresser, a plumber or a lorry driver, they run a pub or a pizza restaurant, maybe they own a chain of dry cleaners or cinemas.

If you are normal, you would think, great, somebody doing something for a living and not a welfare scrounger or a rent-seeker (either in state sector or land-owning sector): I need my hair cut; my pipes repaired and stuff delivered to the shops; I enjoy a drink and a pizza; I need my suits dry cleaned and like going to the pictures etc.

However, if you are smug and Self-Righteous, you will point out to the hairdresser that for every £1 she earns, her boss charges the customer £2, hence that every year she causes £20,000's worth of consumption. Therefore, if she were to stay at home we would miraculously become £20,000 richer because we'd be 'consuming' £20,000's worth less of haircuts.

Ditto plumbers and lorry drivers. If they run a pub or pizza restaurant, they are not, from the point of view of The Righteous, creating wealth, employing people and providing people with a bit of relaxation and a nice evening out; they are enabling consumption. It would be far better if all pubs and pizza restaurants shut down, because although the premises would stand vacant and the employees would be out of work, at least the amount of goods and services 'consumed' in the area would go down by a few million. If you think I'm joking, this was part of the justification for the smoking ban. And so on.

And then it gets really Self-Righteous. The rules are not just a Mercantilist's wet dream (exports are zero-rated - so it's 'good for our balance of trade'), they are also a Paternalist's wet dream: the pro-VAT crowd point out that Small Businesses are exempt (not strictly true); that Righteous things like books and newspapers are zero-rated (I bet they are itching to work out how to impose VAT on spy novels or lads' mag's - in the same way that Righteous Fresh Food is zero-rated but Non-Righteous cooked food is VAT-able); that private education is exempt; that 'essentials' like housing and food are exempt (i.e. land based activities are exempt. As we know, as land is in fixed supply, all such a tax break does is increase the profits to landowners) and so on.

Particularly sick-making was this comment (on the issue of means testing):

VAT is not regressive. It is basically a voluntary tax like the lottery. The deserving poor spend their money on food and housing which are not subject to VAT. The feckless may spend their money on satellite TV, booze and fags. It is their choice to buy these and pay the VAT.

Food and housing are exempt because that's what landowners want. It has f*** all to do with 'helping the deserving poor'.

We already have massive duties on booze and fags (and from a pragmatic viewpoint, that's fine, but why have VAT on top? Why not just hike booze and fags duty a bit and have done with it? That would shift the balance in favour of pubs and away from supermarkets, which appears to be a cause du jour.

As to 'satellite TV', what he really means is 'We Righteous only watch documentaries on the BBC which is funded by a poll tax.' I personally am against Rupert Murdoch and all his Sky TV nonsense, which is why I simply don't subscribe to it - it costs me nothing and its continuing existence does not trouble me in the slightest. As long as Sky TV pay for the value of the radio spectrum they occupy, then I'm happy.

But if The Righteous had their way, anything that Murdoch touches would be taxed at punitive rates; or even better, daytime television and football broadcasting would be made illegal. To hell with the housebound, lonely old people and stay at home mums with young kids; to hell with normal people who enjoy watching and talking about anything as common as football.

And from the point of view of the business that generates the output, the tax is far from voluntary. If you are a VAT-able business you have to deduct it from your hard-earned turnover and pay it over. What do The Righteous want - for all VAT-able businesses to shut down and for everybody to try and get a job in agriculture or private education?

* Disclaimer, I send my kids to private school** and pay a fortune in rent. My wife is genius cook and mainly uses fresh food (which is zero-rated). Apart from about less than £10 a day for booze and fags I struggle to think of much of my expenditure which is liable to VAT.

** I'm all in favour of education vouchers for all - that's a universal benefit, and not a completely masochistic benefit to pander to upper middle class prejudices like VAT exempt or charitable tax breaks for private schools.