Well guy that earn 6000£ a month is going to pay 17.5 £ worth of tax on an 100£ tesco trolley. Guy that earn 1200£ a month is going to pay (guess how much) 17.5£ worth of VAT on a 100£ tesco trolley.

Now if you replace the VAT by an automatic income tax of 17.5% the first guy will pay 1050£ and the second will pay 210.

That sound much more fair to me

you seem to miss one crucial thing………….

A poor person shops at lidle, the middle classes at tesco, and the rich guy at waitrose and M&S, but thats beside the point.

The point is the essentials aren't taxed! Food (the essential bits, but not biscuits) is VAT free, gas an elecy' are in a low VAT band. Also there are safety nets for these things, milk vouchers, very low fuel and water tarrifs for those dissabled/on benifits.

Also, the rich guy probably spends £300, thus his tax (by your incorect method) is £52.50.

And why should the rich guy not have more dispoable income, what's the point in trying if you can't have a disposable income? The very fact that the poor guy has a disposable income almost proves the point that he is in fact not as badly off as he could be.

Juan, we will have to agree to disagree. They both bought the same products and therefore paid the same amount of money. You could argue that since the higher earner was likely on the higher rate of income tax he paid a higher percentage of tax on the goods if you take the calculation from gross earnings.

In fact, how about a flat rate of income tax irrelevant of income, say 30%, then the more you earn the more tax you pay, simple. Perfectly fair.

has everyone forgotten how most of the stuff we buy gets moved around the country? most of the goods in most shops are delivered by trucks and vans – an increase in fuel duty would push their costs up, pushing the cost of goods up in turn. so even the poor people with no car would end up paying for increased fuel duty.

there is no easy answer

has everyone forgotten how most of the stuff we buy gets moved around the country? most of the goods in most shops are delivered by trucks and vans – an increase in fuel duty would push their costs up, pushing the cost of goods up in turn. so even the poor people with no car would end up paying for increased fuel duty.

there is no easy answer

Or it would push more goods onto rail transport?

Or, locally produced goods would become relatively cheaper?

The point is the essentials aren't taxed!

Last time I check clothes and "non essential" such as plate washing powder etc etc are taxed.

But hey what lunge said lets agree to disagree.

Plate washing powder? Pretty sure that's not essential…

Quite right too, that's why they are poorer, generally speaking the poorer you are the more of your income goes on tax, food utilities etc. That's what a capitalist society is all about. The alternative is a communist style system and whilst theoretically a fantastic idea doesn't really work in the real world.

Oh really? Then let me quote a famous capitalist: "from each, according to his means, to each, according to his needs".

You can achieve this by raising the personal allowance, increasing direct taxes above that point, and reducing indirect taxes which disproportionally affect the poor.

Perhaps you could explain what is communist about that?

Basic stuff people:

http://en.wikipedia.org/wiki/Regressive_tax

http://en.wikipedia.org/wiki/Progressive_tax

If you want any sort of green tax (tax on consumption) it will be regressive by nature (because based on usage, not ability to pay).

Looks like you fail to understand how unfair VAT is.

I guess I do. I've been the low-earner guy (as a student and on the dole) and the better off guy and I've never thought VAT was particularly unfair.

If we keep the salary figures ahead, you would have paid 0.29% of your income in taxes, the other guy will have paid 1.46% 5 times more than you.

Cry me a river. To be left with that £100 to spend on shiny things "I" had to earn £148, "he" only had to earn £122. He's already £26 better off, so why should it be cheaper for him to buy as well??

Now due to the marvelous VAT system the poor guys is going to get taxed more than you.

No. "He'll" be taxed exactly the same amount as "me" (on goods subject to VAT). The fact that this amount is a greater part of his disposable income is hugely irrelevant. The item itself is also a greater part of his disposable income. That's because he has less disposable income. If we had the same disposable income then "I'd" be wondering why "I" was working my ass off trying to earn six grand a month!

 

(quotes to emphasise that "I" definitely don't earn six grand a month!)

Perhaps you could explain what is communist about that?

Because taken to its logically "fair" conclusion you would ramp up all tax percentages directly in line with income. Those earning more would pay more and everyone would be left with exactly the same amount after tax.

Those earning more would pay more and everyone would be left with exactly the same amount after tax.

That would require a 100% tax band.

wasn't this a thread about VED, not VAT?

"Or it would push more goods onto rail transport?"

Good point but would diesel burning trains pay fuel tax too?

aargh

Because taken to its logically "fair" conclusion you would ramp up all tax percentages directly in line with income. Those earning more would pay more and everyone would be left with exactly the same amount after tax.

If we were communist, then people wouldn't be earning different amounts in the first place.

Next!

That would require a 100% tax band.

Well, if you were sticking with tax bands then yeah. Say everything above £30,000pa would be taxed at 100%.
Anyone earning less than £30k would naturally receive benefits to top them to £30k.

How does that sound Comrade Ransos and Citoyen Juan? Is that "fair" enough? 🙄

You have to wonder at the mentality of someone who equates progressive taxation with communism.

How does that sound Comrade ransos and Citoyen juan?

Where do I sign…

doesn't it all end up as tax anyway.

40% on earnings
then 17.5% of whats left on VAT
then some of that is taxed as profit of the company selling the goods.
then its payed to the employees and taxed as earnings again.

maybe if we halved all tax, the money would 'go round' twice as quick.

You have to wonder at the mentality of someone who equates progressive taxation with communism.

Then explain please the difference between what I just described and this:

You can achieve this by raising the personal allowance, increasing direct taxes above that point, and reducing indirect taxes which disproportionally affect the poor.

Or talk through my examples and explain again exactly how the poor guy is paying more than the rich guy.

maybe if we halved all tax, the money would 'go round' twice as quick.

Depends what you want. We don't have a particularly high tax take in EU terms. The Scandinavian countries have made a high taxation model work very well – they have high GDP, are well educated and have low rates of inequality. The downside is that a very large chunk of their salaries is lost to taxation.

Or talk through my examples and explain again exactly how the poor guy is paying more than the rich guy.

I'm more interested in the findings of the ONS than your "examples". Why don't you look for yourself?

maybe if we halved all tax, the money would 'go round' twice as quick.

not realy, but youi have hit the nail on the head as to why governments like QE and running their accounts in debit.

Input £1million to the economy, say paying for 10 good doctors.

£500,000 comes straight back in income tax (so you can ay off half the loan)

£100,000 comes back in various forms of VAT

which pays doc number 11, etc etc etc

The remaining £400,000 is taxed 20% corp tax, gettign another
£100,000

It also employs 15 office juniors earning £20k, paying back another £100k in income tax

And the cycle continues untill you actualy get back most of what you put in (and if anyone actualy makes a profit in the country, more).

If you go back far enough the BofE had to start off by printing money (and usualy buying gold with it) which in essance is what it did with QE this time arround.

Input £1million to the economy, say paying for 10 good doctors.

£500,000 comes straight back in income tax (so you can ay off half the loan)

Wouldn't you have to spend that 500k on paying the doctors for 6 months next year.. and then for 3 months the year after, and so on… meanwhile borrowing even more to make up the shortfall?

I'm more interested in the findings of the ONS than your "examples". Why don't you look for yourself?

My "examples" are based exactly on what Juan was saying. Unless Juan is well known to the ONS or they happen to be lurking on this forum then I very much doubt they've taken the time to work up a tax model based on what he says here.

But if you can point me to the ONS page about the £1200pm and £6000pm earners trying to buy £100 bike bits then I'll be pleased to read it.

But if you can point me to the ONS page about the £1200pm and £6000pm earners trying to buy £100 bike bits then I'll be pleased to read it.

Is this through the cycle to work tax scheme or not? (serious point, such tax rebates disproportionately benefit higher earners)

no, imagine that example occoured in year 1. You borrow and invest £1m, get back £1m (hopefully).

This then pays for the same ten doctors which in turn pay for the 11th, etc etc etc etc.

The country is always £1m in debt, but as long as growth (or at least the growth as a result of the loan) out paces the intrest/inflation on the loan you will be breaking even.

The problem is when you try and pay back the 1m you have to lay off the 10 doctors, and the system collapses. Which is why governments don't just pay back their loans.

My "examples" are based exactly on what Juan was saying. Unless Juan is well known to the ONS or they happen to be lurking on this forum then I very much doubt they've taken the time to work up a tax model based on what he says here.

But if you can point me to the ONS page about the £1200pm and £6000pm earners trying to buy £100 bike bits then I'll be pleased to read it.

I've been arguing for the merits of a more progressive taxation system, that fuel duty disproportionally disadvantages the poor, and that the poor pay more of their income in tax than richer people.

If you'd like to talk about bike bits with Juan instead, that's up to you.

Is this through the cycle to work tax scheme or not? (serious point, such tax rebates disproportionately benefit higher earners)

It's been the case for years with more pension relief for higher rate tax payers, but I think the government's putting a stop to it?

I've been arguing for the merits of a more progressive taxation system, that fuel duty disproportionally disadvantages the poor, and that the poor pay more of their income in tax than richer people.

yes, which I believe is the same point as Juan: neither of you like straight percentage taxes at point of sale (either through VAT or fuel duty) as you feel they are somehow unfair to low earners.

So you'd rather get rid of these taxes and just use heavily progressive income tax: ensuring that all taxation is direct in step with income and thus everyone is paid the same.

Because you're commies.

I didn't think it was a hard point to grasp. 😉

It's been the case for years with more pension relief for higher rate tax payers, but I think the government's putting a stop to it?

Yes, Mr Brown has helped himself to plenty of my pension when he fancied over the past few years. Silly people who've put money aside for the future to avoid being a burden to society…..

So you'd rather get rid of these taxes and just use heavily progressive income tax: ensuring that all taxation is direct in step with income and thus everyone is paid the same.

I've argued for none of those things. If the best you can do is set up strawmen, you must have a very weak argument.

Yes, Mr Brown has helped himself to plenty of my pension when he fancied over the past few years. Silly people who've put money aside for the future to avoid being a burden to society…..

He's continuing an inglorious tradition – remember the Tory raid on company pension surpluses? Red or blue, you're screwed either way.

Though on a specific point, giving higher earners more pension relief doesn't seem very fair.

Silly me.

For some reason I thought that you said something about the "poorest quintile in the UK pays the highest percentage of their disposable income in tax" and that you favoured "reducing indirect taxes which disproportionally affect the poor" and "raising the personal allowance, increasing direct taxes above that point".

I'm confused. Was that you or the strawman?

Is "reducing indirect taxes" not the same as getting "rid of these taxes"?

And is "increasing direct taxes" not the same as "heavily progressive income tax"?

Is "reducing indirect taxes" not the same as getting "rid of these taxes"?

And is "increasing direct taxes" not the same as "heavily progressive income tax"?

Bingo! It's not the same. I'm glad you got there in the end.

🙄 Okay then please let me re-state my erroneous summation of your position:

So you'd rather get rid of reduce these taxes and just use heavily progressive increase direct taxes like income tax: ensuring that all taxation is direct in step with income and thus everyone is paid the same.

Because you're commies.

Is that better, or still too much hay?

No it bloody shouldn't!

I drive a classic car and it's free 🙂

Fuel for car tax would screw me right over at 25miles to the gallon.

breatheeasy – Member

Yes, Mr Brown has helped himself to plenty of my pension when he fancied over the past few years. Silly people who've put money aside for the future to avoid being a burden to society…..

Or successive governments have reduced the amount of subsidy paid by tha taxpayer for the more well off folks pensions.

Why should the person who pays tax but can barely afford a pension have to subsidise yours? Thats what tax relief is and with pensions it is a net transfer of money from poor to rich

Interesting debate. Almost makes me wish we had VAT to worry about in Guernsey.

Oh we don't have car tax either, instead fuel duty was increased last year.

I pay almost 75p a litre now! 😀 😀

Hi 5*s to Alwyn, unfortunatley mines a few years past the cut off, thankyou very much Mr Blair, yet another 110 reasons every 12 months I can't wait to piss on your grave on top of the 20,000 other ones you so generously gave me.

ensuring that all taxation is direct in step with income and thus everyone is paid the same.

I thought you were getting there, but apparently not.