The Mudcat Café TM
Thread #55540   Message #868242
Posted By: GUEST,Kimberlin
16-Jan-03 - 08:58 AM
Thread Name: BS: Maggie Thatcher Day
Subject: RE: BS: Maggie Thatcher Day
VAT is a very good example of a flat rate tax that is unavoidable and forms a more significant tax burden on the poor/lower paid. Unlike other taxes it cannot be avoided either by clever accountancy tricks. (avoidance is fully legal - evasion is the crime) )

There are certain low rate or zero/exempt rate items but not all essentials are in these categories so it is not a tax you can totally avoid. If you are on a low income you still have to pay the 17.5% tax on many items and get no "de-minimus" credit allowance against earnings as you would do if all the funds were raised through income tax alone. Even taking account of those lower rated and untaxed amounts still means that a low income family is being taxed on a base rate of say 10% (estimated) on all their income. That then creates a need to pay credits and allowances over and above.

The government constantly tells it is taking more and more people out of taxation but it is at best a half-truth as yes they take them out of income tax but merely claw it back through loads of the other flat rate taxes instead which hit the lower paid harder than income tax and leaves the better off with more disposable income.   

True the very rich still only pay the same rate of VAT but because they earn more the amount remaining is significantly greater. I would need to check it but as you are paying a lower percentage on more I think the growth in what you have left over untaxed becomes geometric not linear. The old cannon of taxation that I quoted of ability to pay goes out of the window totally. Some of the comments above are so close to fascism they make anyone with any decency cringe to think there are people out there who genuinely believe what they have written and even more so that they are mudcatters!

If you are male (as I am) and think VAT is not levied on essentials ask a woman what she thinks are essential purchases every month then see if they are taxed!!