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I haven't seen a definitive answer but I suspect it's heavier on high income people because it can't be avoided , rich people buy more stuff and poor people spend more on zero rated stuff like food.
The only thing that really matters is the amount of money you're giving to the government relative to your own income. If all essentials were zero-rated, then it would be a tax on non-essential consumption, and more progressive in nature.
But you're paying VAT when you fill your car, buy clothes, pay line rental or a phone contract and even (at a reduced rate) for domestic energy supplies. It's largely unavoidable in modern UK society, regardless of your income group.
As for the economist quoted above being a bit 'lightweight', I think it's fair to say that this kind of analysis doesn't really sit at the cutting edge of modern economics.
He's not lightweight - I read q a lot of his tax stuff. He's generally interesting, has a strong political bias to his work, but he is often wrong.
I favour the IFS conclusion but even then they slip and can be misquoted about regressive v progressive. But at least they are not falling at the first hurdle. FWIW, they are clear in their conclusion tha the notion that VAT is regressive (sic) is a myth.
[quote=teamhurtmore ]yes Jaffa cakes were a deliberate choice.
Well of course they were - it was clearly an attempt to deflect discussion by going down that particular wormhole. The suggestion by jamba appeared to be VAT on all food, which is what we were discussing, so homogeneity is irrelevant.
The correct one Martin
Care to provide a link?
Aracer, for the same reason that the IFS disagree with good old Murphy - he's wrong.
Wrong about whether indirect taxes [b]can[/b] be regressive? Because he's discussing VAT in general and I'm just providing that as an example of the possibility that VAT can be regressive. If you consider IFS to be an authority, here we go:
https://www.ifs.org.uk/publications/4813
"the ONS analysis suggests VAT is regressive even as a percentage of spending"
[quote=teamhurtmore ]FWIW, they are clear in their conclusion tha the notion that VAT is regressive (sic) is a myth.
Aha, so you agree that "regressive" is one possibility! 😆
VAT: one of its key benefits is that its paid by tourists/business visitors and those who evade/avoid other taxes
We have more vat exemptions and lower rates than most European countries
Aracer, you are the one that is defecting. In your haste to jump on Jamba you started with the idea that WTO tariffs are a form of tax - ok - you then got lost (1) with VAT, food and regressive ideas and (2) the notion that everyone pays tax. Both are wrong. That was the defection from the relevant point which was about WTO and on the correct path.
Thank you for quoting the ONS. The sloppy use of the term regressive is catching.
"The only thing that really matters is the amount of money you're giving to the government relative to your own income."
Why income? There's no natural law hat says income has to be taxed at all. You could easily run an economy without taxing income.
[quote=jambalaya ]VAT: one of its key benefits is that its paid by tourists and those who evade/avoid other taxes
Oh you're back.
VAT on food - regressive or not?
When did you predict the EU demise would be?
In fairness, aracer, that's one line from a report which broadly aims in the other direction. Partial quoting doesn't actually counter their argument.
However, the main argument that the percentage of spending stats are misleading seems to be that for many in the lowest decile of income, it's just a temporary thing, and the burden will somehow be 'smoothed out' when they are not a student or retiree, or between jobs.
That's all well and good, but a sizeable chunk of that decile, and the chunk we should be interested in, are those whose presence there is not a transient one. They have no opportunity to smooth things out by getting a well paid job or drawing down on savings.
The other point is that the IFS revised chart looks at VAT as a percentage of post-tax income. In other words, the direct effect of VAT may be regressive in isolation, but the overall tax system more progressive because of the allowances system. That doesn't suddenly make VAT flat or progressive, it just means that its effect has been mitigated by more progressive elements such as income tax or NI take.
For me, at least, there's nothing there that disproves the 'myth'. Just finding ways to adjust the graph so it isn't so striking.
[quote=teamhurtmore ]The sloppy use of the term regressive is catching.
Opinion is divided on the subject.
Edit. Double post by mistake
Aracer, you are the one that is defecting.
<precision> Where's he defecting to? Is he Russki? </precision> 😀
[quote=teamhurtmore ]Aracer, you are the one that is defecting.
(sic) 😆 - it's part of your standard methodology, and you still haven't answered a simple question
the idea that WTO tariffs are a form of tax
looks like a tax, smells like a tax (who gets the money? follow the money...)
the notion that everyone pays tax.
quote me
That was the defection from the relevant point which was about WTO and on the correct path.
So I was deflecting from a deflection? 😆 We [b]were[/b] discussing Carswell being an arse.
p.s. you might want to google the quote in my previous post
Your versions of precision Aracer is clear. Even with the edit you claim that almost everyone pays income tax. here you go:
(almost) Everyone pays income tax,
1/3 of UK adults pay no income tax. So your benchmark is clear.
you should have stuck to WTO - you were on safer ground there.
edit? that's the original (and if you're asking for precision, then it doesn't provide proof of your claim at all)
I'll take your point about income tax, though it's still quibbling, because those people who have money to pay more tax pay income tax (increasing the threshold to remove people from it is generally agreed to be a good thing - apart from by you, jamba and Carswell presumably).
Though I realised I missed the obvious flaw in your argument - are you suggesting that there are people who spend no money at all on anything other that zero rated VAT items?
Have you seen the level of tax on 20 Bensons?!!
"are you suggesting that there are people who spend no money at all on anything other that zero rated VAT items?"
I would imagine homeless people buy nothing except food.
I would imagine homeless people buy nothing except food.
It's even better than that - many of them are gifted food or bin-dive, which is even more progressive. The economics of homelessness have rarely been more positive.
As soon as they bring in a cardboard allowance, things will be golden for those guys and gals.
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Cheap as chips, and there's no tax at all on brown. Ker-ching!
Oh you're back.
VAT on food - regressive or not?
When did you predict the EU demise would be?
I do have better things to do from time to time.
VAT on food and full rate on utilities is charged throughout Europe (the EU has tried a number of times to get us to charge full rate and even harmonise vat which would have made it compulsory we charge it on food). They seem to manage without society collpasing and millions driven into poverty.
You tell me, please quote a post as you seem fixated.
When (most?) people on the left say they will pay more tax they don't really mean it. What they mean is I'll pay a tiny bit more as long as somelse pays a lot more as that's fair.
Aracer, you are incorrect * again I'm afraid. I am all for a higher personal allowance.
* albeit within your current "levels of confidence" around your precision benchmark 😉
[quote=jambalaya ]When (most?) people on the left say they will pay more tax they don't really mean it. What they mean is I'll pay a tiny bit more as long as somelse pays a lot more as that's fair.
When (most?) people on the right say they're to pay a fair rate of tax they don't really mean it. What they mean is a millionaire paying the same amount of tax as somebody on benefits, and any discussion on alternatives is dismissed as lefties wanting somebody else to pay for things (though this does of course ignore the lefties who already pay more tax than most and are happy to pay even more as long as everybody with their level of wealth does).
[quote=teamhurtmore ]Aracer, you are incorrect *
Well I'm happy to incorrect in this case on something I was simply presuming, rather than anything I'm claiming to be a fact. So that just leaves jamba and the honourable member.
"What they mean is a millionaire paying the same amount of tax as somebody on benefits,"
Of course, you can fix that by biasing your tax take towards VAT which is impossible to avoid.
We could always divert 😉 on to flat rate taxes and whether they are/ can be progressive or not 😉
That's always a giggle
FWIW, I'm in favour of lower taxes across the board.
Poor old boy smashed on his first question in PMQ.
The Shadow Front Bench look particularly miserable today
[quote=teamhurtmore ]FWIW, I'm in favour of lower taxes across the board.
So you are in agreement with Carswell.
If that is what he believes, then yes
(frankly I don't pay him that much attention - £250k cough)
Crap PMQs today. Perhaps they are all distracted by what is or isn't to follow
When (most?) people on the left say they will pay more tax they don't really mean it. What they mean is I'll pay a tiny bit more as long as somelse pays a lot more as that's fair.
Jamba people on the left have never made a secret that the think the rich should pay more tax than they currently do. I have no idea why you think they're trying to hide this. The question is how much more? In a world where the super rich and corporations pay less tax as a proportion of their income than normal working people on average salaries or small businesses it's ridiculous in the extreme to suggest that this is borne of envy or double standards.
I'm guessing Leona Helmsley was a leftie given her views on universality of taxes
Crap PMQs today.
It always is now. May just looks bored. Like she's barely stifling a yawn. Or a grin. A look of 'is this it? This is seriously the best you can come up with?' resignation on her face. The same look on the faces of those on the benches opposite... 'is this it? This is seriously the best we can come up with?'
And why wouldn't she? At least Millibean used to land the odd punch. Know how to get Dave going bright red and lose his shit from time to time. Halcyon days eh?
Mays biggest problems are sat behind her, not mumbling incoherently and totally ineffectually into their notes from he dispatch box in front of her. And she knows it.She needn't expend even the smallest amount of energy, or thought, to casually swat away Corbyn every week. Bigger fish to fry...
Agreed binners
Even Angus was off form today and he is usually the main Opposition
Far too easy....
Was there a letter from Sandra in Cramlington?
He's not lightweight
I am afraid I am going to have to disagree with you, as soon as he strays into economic policy all he can do is mash together other peoles's ideas. It was hardly a surprise that he wasn't on Corbyn's panel of economic experts - he doesn't have the heft of Wren-Lewis, Stiglitz, Blanchflower etc.
Now let's move onto taxation, a milieu I know a bit about, I am reminded of [url= http://https://www.theguardian.com/politics/2015/sep/22/richard-murphy-corbynomics-tax-social-housing-britain ]this article[/url]. I won't go through line by line but there are two pretty startling mistatements (I am being kind).
First, there is this statment
“I did a quick Google search,” he says, “and discovered that I could get 500 courses in accountancy, and none in tax. Why is something that is so important so little researched and only taught as an adjunct to accountancy? Why aren’t we researching the sociology of tax, the philosophy?”
Well his Google is broken because when I google it plenty of courses come up. This doesn't surprise me as two of the best guys I worked with on tax, both partners at one of the major city law firms, studied under John Tiley, the first serious tax academic at Queen's, Cambridge in the 1970s.
Second, there is this one
Vince Cable nicked some of my ideas in 2009 and put them in to the Liberal Democrats’ manifesto, which meant they got into the coalition agreement, which meant the general anti-abuse law [part of the Revenue’s tax avoidance strategy] in 2013 came from me
Now he has really overreached himself here. I trained as a tax adviser at a rival big accountancy firm at the pretty much the same time as Murphy. The relative merits of a general anti-abuse law were being debated in the technical press then. Tony Blair's Labour Government issued a consultative document on it in the late 90s, while he was still a jobbing accountant. It is therefore ludicrous for him to claim credit for the idea.
You may say he must be an expert because he appears on TV and in the papers alot and the International Tax Review said he was the 7th most influential person in the tax world. Media exposure leads to influence and there is no doubt he gets alot of media attention. In my view this is as much to do with the fact that very few people in the tax field want to put their heads above the parapet, it is not in their interests. Second there are alot of unflamboyant and introverted people in tax, there is a lot of truth in the quip, "the quality of the tax advice in inversely proportional to the quality of the suit", when they do get forced into the sunlight, they are dreadful TV.
I am not writing off all his work, but I am always take what he says about anything with a hefty pinch of salt because his level of expertise and achievements are overstated by the media and sadly, it appears by himself.
Well said - although lightweight is too harsh IMO
Phil getting a bit cocky with his delivery on the budget now
May looks knackered (unsurprisingly)
I'm guessing Jeremy is back on his allotment by now?
Do you want him to catch his death of cold? (no, don't answer that) Give him a chance to put his cardy on first
Wednesday is jam day, Binners.
Even though he's totally anti-sugar on health grounds.
Actually. Hammond is messing what has been a good delivery with rather crass and too frequent diggs. The poor old boy is already in the gutter. The Budget isn't the time smash him further. Rather poor show...
Very good to hear a politician describe it as "the NHS" not "our NHS"
Good luck to Jeremy - toughest gig in politics this response.
Any news on 'Hard Working Families'? Its all Brexit this, Brexit that nowadays.
I miss 'Hard Working Families' 😥
Jezza's back and sounding q angry....Not so hot on reading the script though. Intonation is awful.
toughest gig in politics
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Has someone vandalised his shed?