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View Full Version : Was Purchase Tax fairer than VAT?


vulcanised
13th May 2013, 14:35
Just been thinking about that, and I think the answer is Yes.

True, the last luxury goods rate I remember was 55%, but that was levied on factory gate prices, so probably equalled today's VAT which is on damn near everything, never mind luxury stuff!

Also, lots of companies and self-employed get the tax back on things like fuel, furniture, repairs and renewals, etc./ Think that's right?

Let's kick out VAT together with the EU, where it came from.

beaufort1
13th May 2013, 14:36
Dunno, don't have either. :E

Msunduzi
13th May 2013, 14:49
Yes, VAT is fairer.

And the reason some get some of it back is in the name.

Unfortunately, it is easier to fiddle to :)

G&T ice n slice
13th May 2013, 16:58
One of the original drivers of the VAT concept was that it would pretty well be a complete replacement for income-tax (hooo haaa hooo hahahahahaha )

It is a "virtuous" tax inasmuch as it targets consumption and not earnings - promoting the idea that saving is better than spending (remember the high-inflation years here in the UK?)

And if I remember correctly, around the time that it was introduced there was a reduction in income tax levels. (or maybe it was in the allowances?)

One of the other benefits (to the gummint) is that there is a merry-go-round of money through the VAT system which generally results in the government effectively borrowing money - being the "float" difference between the VAT a company has to pay on goods & services acquired and the VAT the same company then reclaims against the VAT it charges on G&S that it supplies to 3rd parties. (I've not explained that very well)

When it was introduced in the UK in 1973 it was 10% and the base rate income tax was 12.5% (?) or about 40% (?) for earnings above 10K per annum

Now the base rate is 20% and VAT is 20% - so in effect in 1973 we would be paying 10% vat +12.5% IT = 22.5% and now we are paying 20% vat + 20% IT = 40%

Whatever way you look at it we are being shafted

HyFlyer
13th May 2013, 17:19
I can think of exactly ZERO cases in recorded human history, where the ruling entities haven't 'shafted' the ruled......

All government, no matter how beneficially constructed initially seems to accumulate the dregs of the species and end up needing to be replaced.
Nature of the beast I suspect.

Pleased if somebody can present a solidly researched counter case.....:), but equally not holding my breathe waiting.

Milo Minderbinder
13th May 2013, 20:46
Purchase tax was a lot fairer

And more importantly it didn't mess up company cash flow

mikedreamer787
14th May 2013, 00:56
There's no such thing as a fair tax.

Taxation is theft - pure and simple.

Loose rivets
14th May 2013, 07:08
6d in the pound was described as, 'the thin edge of the wedge.'

How right they were.



In America, if you believe Michael Moore, a federal tax was never made legal. Indeed, income tax is not legal by the same reasoning.

That money which is taken, by fair means or foul, only pays the interest on the sum owed - not to the nation, but to a private 'nomenclature'.

mikedreamer787
14th May 2013, 07:14
Indeed Loose this'd be worth a download and good read -

www.libertarian.co.uk/lapubs/polin/polin044.pdf‎ (http://www.pprune.org/www.libertarian.co.uk/lapubs/polin/polin044.pdf%E2%80%8E)

Admittedly some points are debatable but the gist I certainly
agree with.

sisemen
14th May 2013, 07:22
I can think of exactly ZERO cases in recorded human history, where the ruling entities haven't 'shafted' the ruled......

I give you the "World's Best Treasurer" (AKA Stupid) Wayne Swan of Australia

Leading economist Ross Garnaut has told a Senate committee that the mining tax is highly flawed and may never raise any revenue in its current form.
A Senate committee is investigating the Mineral Resources Rent Tax (MRRT), which has raised barely $100 million of revenue after Treasurer Wayne Swan said it would be relied on to raise $2 billion this financial year.


Read more: Mining tax deeply flawed, Garnaut says (http://www.theage.com.au/business/mining-and-resources/mining-tax-deeply-flawed-garnaut-says-20130429-2io7u.html#ixzz2TFVHJ94T)

Pressure has been mounting on the federal government to ‘fix’ the tax after it was revealed it only raised $126 million in its first six months.

A figure well below the full-year forecast of $2 billion.

The Gillard Government has created another financial disaster exactly like its mining tax - but even worse.

Its carbon tax, which it expected to raise $9 billion a year, is now likely to raise much less than half that from 2015, with the money already promised away in compensation and tax cuts.

Treasurer Wayne Swan’s belated admission, last Friday, that the government’s mining tax raised virtually no revenue in its first six months.
After attempting to block the release of the tax data—alleging that to do so would illegally invade the corporate privacy of the mining companies—Swan eventually revealed the miniscule amount raised by the Minerals Resource Rent Tax (MRRT) during the first half of the 2012-13 financial year.

It used to be that you had to go to the circus to watch clowns in action.

stuckgear
14th May 2013, 08:29
One of the original drivers of the VAT concept was that it would pretty well be a complete replacement for income-tax (hooo haaa hooo hahahahahaha )


Taxation while at minimal percentages serves to provide state provided benefits to society and the nation, however, when taxation becomes punitive, it damages economies, the state and the welfare of society at large.

Governments seek to to extract ever more taxation from the electorate which they spned and waste by the countless billions with no repercussions, further damaging economies, nations and societies.

Therefore it is a public service in mitigating ones tax exposure. Governments must learn to seek efficiency and ROI from the tax spend. The only way to do this is to reduce the dependency that governments have on the 'seemingly' inexhaustible supply of tax grab.

Do your duty to your country. mitigate your tax exposure.

UniFoxOs
14th May 2013, 09:12
For furriners who don't know what VAT is, here is a simple explanation:-

HOW VAT WORKS

A forestry company grows trees. When mature they cut the trees down and sell them to a pulp maker. The pulp maker pays the VAT then claims it back from the Government.

He makes it into pulp and sells it to a paper manufacturer. He pays the VAT then claims it back from the Government.

The paper manufacturer makes paper and sells it to a bag maker. He pays the VAT then claims it back from the Government.

The bag maker makes bags and sells them to a wholesaler. He pays the VAT then claims it back from the Government.

The wholesaler sells them to a retailer who pays the VAT then claims it back from the Government.

The retailer sells you some sweets and gives you the paper bag with them in.

Some of us don't quite see the point of VAT.

arcniz
14th May 2013, 11:05
There's increasing talk about doing a VAT-ish tax in USA, so as to capture some rev points on Interstate Commerce -- which the Federal gov mostly cannot now do well under law, and the States are forbidden to do -- so thus to theoretically simplify the Federal tax codes, which now are written mostly to assure perpetual employment opportunity for accountants and lawyers. The US Federal tax rules now run into some 80,000 pages of relatively fine print --those are the Offficial regs themselves, meaning that even bare-bones explanations for same are likely about 1000x longer in print and, when multiplied by 350 million victims or so, becomes an amount of productive time thrown away that is equivalent to wasting several million human lifetimes per year.

Economic Life in America grows more hellish every day, mostly because deciphering the tax rules and regs from the Feds and the States and the Counties and the Cities and the special overlay levies, etc., consume so much of peoples' time and work resources that little remains for actual productive things. Now that the tax writers have discovered computers, they write rules (the secret word here is "recursive") that mere humans cannot compute in a lifetime, even for simple cases. Those are plainly unfair, practically unarguable, and growing like topsy. The Nuclear option for Accounting that is, with clients dropping dead from exertion and puzzlement before they can figure out how to protest an error on the tax Collector's side.

Dostoyevsky's comments about bureaucratic intransigence in the terminal days of Tsarist Russia -in his marvelous opener to Crime and Punishment - have some ominous resonance in re the current state of affaires in the New World gone ripe with Central Greed and intellectual whoring to expediency over equity or principle.

A "tax everything that moves" VAT approach has appeal to US pols, but Refunds as goods progress through production tiers may or may not be included. Near all US politicians have little grip on how commerce or business or progress work, despite armies of increasingly well-paid advisers.

A problem the US has now is that near everything useful is manufactured somewhere else, including even the substantial but fuzzed-over population growth from border-hopping aliens, and major financial cities and States seemingly would like to keep it that way. So now, instead of helping solid companies develop real productivity and growth, they're trying to figure out how to tax people everywhere and anywhere who put a toe on or in US trade. Fat chance, maybe, but the conceptual issue is one that will increasingly affect economies, advanced and not, in a zero-sum one blue orb sorta planet economy.

A lot of what historically has been called "commerce" has really been some sort of theft, on one side, or extortion from the other. As these practices grow more accountably visible, some new exotic ditzy rationale must be contrived to explain how "Growth" comes about on a balanced, stable, ecologically correct planet. Cooking the books is likely still the best option. Has worked for many civilizations, empires, governments, etc over the Millennia -- with only occasional upsets.

Don't feel depressed... "More perfectly actualized" is the politely proper way to describe the ascending transmillennial vibe of weaning economic despair combined with wholly irrational collective bubbly optimism about near everything else.

Usta be called "carpe diem".

Msunduzi
14th May 2013, 11:20
There are no refunds as it moves through the process, the amount payable is reduced by the amount already paid, if it is paid, often/usually it is not charged in the first place, the VAT registration number is given to prove they do not need to pay it when the item is purchased.

Metro man
14th May 2013, 11:32
Basically;

If it moves, regulate it.
If it still moves, tax it.
If it stops moving, subsidise it.

A socialist never came across a tax he didn't like.

UniFoxOs
14th May 2013, 16:45
There are no refunds as it moves through the process, the amount payable is reduced by the amount already paid, if it is paid, often/usually it is not charged in the first place, the VAT registration number is given to prove they do not need to pay it when the item is purchased.

I hope you are not in business in the UK.

UFO

racedo
14th May 2013, 18:55
There are no refunds as it moves through the process, the amount payable is reduced by the amount already paid, if it is paid, often/usually it is not charged in the first place, the VAT registration number is given to prove they do not need to pay it when the item is purchased.

Er wrong

A food manufacturer does not charge VAT to the retailer and VAT is not charged by the retailer. However manufacturer pays VAT on Gas and Elect, paper and packaging, equipment and anything else it buys to run its business.

At end of every month (quarter) they do a VAT return and get the vat paid back.

UniFoxOs
15th May 2013, 07:45
One of the other benefits (to the gummint) is that there is a merry-go-round of money through the VAT system which generally results in the government effectively borrowing money - being the "float" difference between the VAT a company has to pay on goods & services acquired and the VAT the same company then reclaims against the VAT it charges on G&S that it supplies to 3rd parties. (I've not explained that very well)

Yes, you didn't explain it very well - because it is not true. At the end of a quarter a company does a VAT reconciliation - it works out the total it paid that quarter and total it collected, subtracts the two and pays the gummint the difference (or claims back if it is, for example, in the food business and charges no VAT but still pays it on its supplies). Thus the gummint is lending the money to the company for a quarter (or part thereof) and not the other way round.

Capetonian
15th May 2013, 08:03
Interesting comment from mikedreamer787 (http://www.pprune.org/members/397427-mikedreamer787) in : Location: Cyprus


There's no such thing as a fair tax.
Taxation is theft - pure and simple.

Given what's recently been going on in Cyprus, I have some sympathy with the comment, but ...... dreamer indeed.

Some taxation is indeed theft, but then that depends on the perspective. Society could not function without some provision for public services and amenities and the only way to this is by a levy on income and/or expenditure. Of course in an ideal socialist utopia that may not be the case, but we all know that is an unattainable Nirvana, so we have to work with what is practical.

Fair levels and methods of taxation do not encourage evasion.