U-turn’ed

As many of you’s may have heard, VAT in the UK’s gone up to from 17.5% to 20%. However one leading politician has pointed out that VAT rises are a regressive tax that hits those on low incomes the hardest, his name? David Cameron….course that was back in April 2009 when he was having a go at the Labour party, of course now he’s in government he’s now in favour of VAT rises, bless!
http://www.newstatesman.com/uk-politics/2011/01/tax-rise-vat-osborne-tory

Another flip-flopper of the week is Kraft foods. They took over Cadbury’s last year. The unions warned that they’d screw around with the company and move production overseas. Totally untrue, socialist nonsense! Kraft said, of course they intended to keep the UK factory’s open. Indeed the news now is that…they plan to close the main UK factory in Somerdale…and moving production to Poland.
Isn’t it great to live in a world with all these honest and trustworthy people!

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2 thoughts on “U-turn’ed

  1. The real issue is possibly not whether the tax is regressive or not. There is no such thing as a ‘good’ tax. All taxes of universal application are in some way or another regressive. The issue is whether a VAT rise is preferable to the alternatives: higher income taxes and/or national insurance rates.

    As our unreformed income tax system was demonstrably unfair on the lowest earners since the abolition of the 10% rate by Labour and NI is a tax on the employed (as opposed to say, people who live off the interest on savings or from buy to let investment) then one of the key questions question is, which tax rise does least harm to the economy and the long term interests of the poorest?

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    • I was more taking a dig at politicians and they’re lack of honesty. In the lead up to the election I pointed out (not on this blog, elsewhere), that it was obvious that the next government would be spending a good deal of its time tackling the deficit. It was essentially a choice between Labour, who’d be more inclined to put taxes up to deal with the deficit, or the Tory’s, who’d favour public spending cuts (thought inevitably whoever won would have to do a bit of both). However, this issue was scarcely mentioned during the campaign. Instead the election was decided by the colour of Dave Cameron’s ties, Bigotgate and Nick Cleg’s hair do, the politicians avoided talking about the deficit as much as possible and the media were too spineless to put them on the spot on it.

      Of course corporations are no better, “no we won’t close this factory and move production overseas, scout’s honour!”….6 months later guess what happens…

      As far as VAT goes, yes you have a point, VAT rises are a little fairer than income taxation as it hits people’s consumption, rather than their income. Thought I’d point out that a straight VAT rise does hit those on low incomes as it increases their living costs somewhat. I’d favour modifying the VAT rate to operate on more of a sliding scale. More essentials (like bread, milk, cereals, tea, etc.) would be exempted, or charged at a lower rate than shall we say creature comforts (alcohol, cars, computers, etc….& Jaffa cakes!) while high end luxury items (caviar, diamond necklaces, etc.) would pay an even higher rate. Another alternative is to link the VAT rate charged on products to the lifetime carbon footprint of the product (that would encourage manufacturers to produce goods that were more carbon neutral, energy efficient and longer lasting). Although I admit my approach would probably be fairly complex and would need careful planning to make sure it working fairly.

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