The Budget

[david_carnell]

Jeremy - a rise in VAT is not fair. It is not discriminatory against those who have the ability to pay. It is regressive. It hits everyone equally regardless of income. Some necessities or essentials are exempt (food) but some are not (adults clothes for eg.). Consumer electronics (tv, radio etc) are not exempt either and these are now far from luxuries. They are included in the RPI so therefore are seen as everyday goods. ?50 on a new tv might be peanuts for the rich but that could be a huge amount to someone on a low income.

Skidmarks - is there a threshold of income at which people are free to watch Sky without fear of your disparaging remarks?

It also hurts small businesses as people tend to spend less due to the higher cost of goods. It is likely to cost them more than the reduction in corporation tax or the NI reduction for those employing 10 or fewer employees.

[Brendan]

That's the point I made earlier. I know a few guys who are small scale retailers and they are shitting it.

[Jeremy]

A new LCD TV is a luxury. Second hand CRT TVs can be picked up cheaply or free.

I would expect new adult clothes to be only a small part of the monthly outgoings for the country's poorest.

While there are bound to be a few counter-examples, VAT is generally applied to luxury goods. Inclusion in the RPI has nothing to do with whether an item is essential or not.

> is there a threshold of income at which people are free to watch Sky

Yes I would say there is... i.e. when a family can support themselves and have sufficient surplus income for luxuries.

[Brendan]

Can I get some sort of tax credit for specifically choosing to avoid Sky at all costs?

[SeanMacGabhann]

Another point about VAT - from a consumer and a retailer perspective - is that I recall the drop to 15% from 17.5% being met with derision from all quarters - "What good is a few pennies off to me" or "Biggest impact to me will be changing all my menu prices" type thing. And now we have VAT going up to 20% it's going to be the ruin of us all? I think not..

[skidmarks]

SeanMacGabhann Wrote:

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> Another point about VAT - from a consumer and a

> retailer perspective - is that I recall the drop

> to 15% from 17.5% being met with derision from all

> quarters - "What good is a few pennies off to me"

> or "Biggest impact to me will be changing all my

> menu prices" type thing. And now we have VAT going

> up to 20% it's going to be the ruin of us all? I

> think not..

My mother runs a pub; she found the VAT drop was a life line to her small business. She said last night the rise to 20% in January will ruin them and it couldn?t happen at a worse time of year for a pub.

[david_carnell]

Jaysus - heaven forbid the poor should be allowed anything to make their lives a little less dreary.

Booze - your poor, you're not allowed it.

Cigs - ditto

TV - likewise

New clothes - go the charity shop!

Heck, why don't we put them all to work on farms in the open air and then they'll be too tired to be feckless drunks watching Jeremy Kyle.

But it's not just the very poorest either Jeremy. Tbh, it's me I'm thinking about too. I earn a decent salary (around the national average) but VAT will hit me a sight load more than a lot of people around here who earn closer to six figures. And that's regressive.

If you're ok with that, just say so. Admit you don't care that the poorer you are the more you proportionatly pay in tax of your income and we'll move on. But don't try and rally around the idea that if only poor people didn't buy "luxury items they'd have more money and could stop moaning. It's offensive and wrong.

[Brendan]

There's a point in a thread where someone links to a DailyMash article. I think this is now that point.

http://www.thedailymash.co.uk/politics/politics-headlines/how-the-budget-will-affect-your-pointless%2c-money%11obsessed-life-201006232841/

[Jeremy]

My logic is based on the simple assumption that people with higher incomes will spend a greater proportion of their salary on non-essential goods.

It's not offensive at all - certainly not as offensive as you twisting what I am saying and putting words in my mouth.

Maybe I'm missing something. How does the VAT hike hit you harder than richer people? What are you buying that they aren't?

[SeanMacGabhann]

skidmarks - fair point. It's just all I heard at the time was a big "meh". I would have liked more stories like your mum's

Jeremy - I think you are missing something. read your last sentence again. Person on say 200k a year spends a shed load on luxury goods. They now have a lot of luxury goods and plenty left over for essentials

Someone on say 22k a year buys a few things with increased VAT on them - less to play with all of a sudden

[red devil]

Brendan Wrote:

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> There's a point in a thread where someone links to

> a DailyMash article. I think this is now that

> point.

>

> http://www.thedailymash.co.uk/politics/politics-he

> adlines/how-the-budget-will-affect-your-pointless%

> 2c-money%11obsessed-life-201006232841/

Jeremy, you are 'Tom Logan' and I claim my ?100k bonus...

[Moos]

A hike on VAT is fairer than a hike in income tax, surely? At least you have the choice of what to spend your money on, rather than having it taken away at source.

[Brendan]

I?m trying to figure this out too. Is it because poorer people spend a higher percentage of what they earn on goods. So if someone on 20K may spend 50% of their salary on items which are subject to VAT when someone on 100K may only spend 20%. So the poorer person is paying 17% on 50% of their salary when the richer one is only paying the 17% 20% of their salary?

:-S

[Jeremy]

I believe the opposite of that is true, Brendan. I think that people with less money will spend a smaller percentage of their income on non-essential goods. Therefore paying proportionately less VAT.

This seems to make me some sort of tory-nut-hugger lunatic.

[HAL9000]

It is just as likely that the increase in VAT revenue will be offset, or even overtaken, by the increase in European Carousel Fraud that a rise to 20% will attract to the UK.

Those with VAT registered businesses are now even more likely to ensure that the maximum amount of VAT is reclaimed on purchases. Most so-called luxury electronic goods can be categorised as staff educational or training equipment, for example.

[Brendan]

Well is the price of a pint going to go up?

Even if the duty on beer doesn't surely the VAT increase will have a knock-on effect.

[SeanMacGabhann]

Beer - that's another thing. Everytime a budget goes "3p on a price of beer" I think "hang on, cost of a pint since the last budget has gone up several times, and all by more than 3p

So in conclusion - budget shmudget

[Loz]

Concentrating just on the VAT increase is taking it out of context. If you look at the budget as a whole, the richer have taken more of a hit than the poorer. Taking one item of the budget and then saying, 'look how the poor will suffer' is playing politics.

I know that this only applies to people with incomes, but ?200 extra due to the tax threshold is equivalent to the increase in VAT on ?8000 worth full-rate VATable goods (i.e. not foodstuffs, kids clothes, rent/mortgage and energy). Is you average low paid worked really going to spend ?8K on such goods in a year? If not, they are up on the deal. As pensioners have a guaranteed 2.5% rise coming, they will be OK as well.

PS David - did you get a chance to look at my query about your graph? It still doesn't make sense to me.

[Brendan]

SeanMacGabhann Wrote:

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> Beer - that's another thing...

All I know it that the price of a pint in a pub has doubled in the last 7 years but the price of 6 1 pint tins of lager is still the same price.

What the fuckis going on there and what is this government going to do about it ?ey?

[Brendan]

Probably put the price of cans up, that?s what. Arseholes.

[Brendan]

Cans ? that?s another thing. How exactly is this going to effect Soho?s micro economy?

[Marmora Man]

What the fuckis going on there and what is this government going to do about it ?ey?

I rather like the idea that this government doesn't think it has to something about everything. Less micro management - more responsibility. A good thing.

[Mick Mac]

Jeremy Wrote:

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>

> This seems to make me some sort of tory-nut-hugger

> lunatic.

Yes - say anything slightly elitist Jeremy and you are done for...don't mention being middle income whatever you do.

[Jeremy]

Mick Mac, I don't think my views are elitist in the slightest! But I'm all for trying to apply some logic to the situation.

[Peckhamgatecrasher]

Sorry to make this personal Jeremy, but you lose all class/non-class arguments by dint of your name. Now if your moniker were Gary ...