And it will benefit the well off disproportionately, as usual with this lot. Fuel vat is only 5% anyway, there's no vat on rent, and it's mixed on food, but generally not levied on most food items. Will barely help the worst off, but will cost the country a fortune in future. If true, it simply reinforces how utterly thick that woman is, as if there were still any room for doubt . I expect this will be proposed, ridiculed, explained as having been misinterpreted and then quietly put away, like most of the other shit ideas she's had.
The screamingly obvious simple solution is a windfall tax on the producers used to reduce the price cap and making distributors whole on the shortfall in costs. I'd also introduce a cap on business energy costs to reduce insolvencies, even if it's higher than the domestic cap.
If they do nothing, costs to the NHS will shoot up if we have a cold winter (and the perfect storm of all the shitness of the last few months suggests sods law can be confidently applied) as old folk are carted in with malnutrition or hypothermia.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
Sorry, reducing VAT does help the poorest, they spend a higher proportion of both income, and disposable income on VAT than their richer equivalents.
If VAT was being increased, I am sure there would be plenty on here stating that point.
Don't just take it from me though, take it from a source that hopefully most of those with their usual axes to grind can listen to, the European Parliament.
I'm sorry, this is simple economics and to argue otherwise will be done purely from a position of either willing or unwilling ignorance. Take your pick.
Windfall tax on all businesses making huge profits, higher tax for those top earners who have the broadest shoulders, increased tax on unearned income, increase tax thresholds which are ridiculously low, increase minimum wage as nobody working full time should be in the position of needing to claim benefit.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
Sorry, reducing VAT does help the poorest, they spend a higher proportion of both income, and disposable income on VAT than their richer equivalents.
If VAT was being increased, I am sure there would be plenty on here stating that point.
Don't just take it from me though, take it from a source that hopefully most of those with their usual axes to grind can listen to, the European Parliament.
I'm sorry, this is simple economics and to argue otherwise will be done purely from a position of either willing or unwilling ignorance. Take your pick.
If you can't afford to pay your energy bills, how are you going to be able to afford the goods that attract VAT? A VAT cut isn't going to help people who can't afford to spend money on anything but the basics, most of which don't attract VAT.
Reducing VAT is a different tool to solve a different problem which I think needs solving too. If inflation is 10% and rising, cutting VAT surely has a lesser impact on Government receipts and in fact could potentialy have a positive impact as the economy is kept going a bit like cheaper tickets at Charlton can make more money because of larger crowds.
But the energy price rises is beyond that with crazy numbers being provided and the way they are arrived at makes them reliable crazy numbers. You need to freeze the cap to deal with these and aligned with a VAT cut, it could help steer us through this major crisis.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
Arguable that it will keep a lot of the lowest paid in jobs tho.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
Arguable that it will keep a lot of the lowest paid in jobs tho.
It may do that yes, but it isn't going to provide much help for low paid people pay their bills.
If you can't afford to buy a product which has a VAT cut, you are not going to benefit from that VAT cut.
Businesses don't have to pass on the VAT cut anyway, as frequently happened when VAT was cut as part of the Covid relief.
Surely if the government don’t cap energy prices properly it will have a hugely negative effect on business. All of the business that is expected to help the countries growth. If their energy bills are going up by 100-300 % in the future they either go bust or pass those rises onto the consumer , which makes a 5% vat deduction completely ineffective.
VAT is actually a regressive tax, meaning that the poor pay a higher proportion of it in terms of their income, at least, that is the argument I remember people criticising the government about in 2011 when they raised it to 20%. Although to be fair I am sure that they can do nothing right in many people's eyes. Too invested in disliking them.
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
Reducing VAT will not help the poorest, it will however help those who are able to afford 'luxuries' like eating out, entertainment, holidays and consumer goods, most of which are out of reach of the lowest paid.
Arguable that it will keep a lot of the lowest paid in jobs tho.
It may do that yes, but it isn't going to provide much help for low paid people pay their bills.
If you can't afford to buy a product which has a VAT cut, you are not going to benefit from that VAT cut.
Businesses don't have to pass on the VAT cut anyway, as frequently happened when VAT was cut as part of the Covid relief.
That is a good point. If they have higher expenses, which they will have, they may try to absorb them using the cut. Of course there is a point where people won't buy their product. It probably needs very tight management and a hands on chancellor.
Windfall tax on all businesses making huge profits, higher tax for those top earners who have the broadest shoulders, increased tax on unearned income, increase tax thresholds which are ridiculously low, increase minimum wage as nobody working full time should be in the position of needing to claim benefit.
How the hell did you ever vote Tory?
The current marginal tax rate for top earners is 48.25% - I have no issue in raising that but it really doesn't solve the problem because the revenue generated would be a drop in the ocean and the law of diminishing returns kicks in - it's been tried before and tax revenue actually drops.
For windfall tax read increases in corporation tax rates (and dividend income should be taxed at the same rate as normal income) - no issues with that as long as it doesn't stifle investment. Increase capital gains tax - no issues with that at all.
I suppose the mass reduction in energy use by the desperate this winter will have a beneficial effect on the climate crisis. Those in power might look at street sleepers and declare ‘energy costs are not a problem for them, so it shouldn’t be a problem for anybody else’.
A 5% VAT cut ain't going to touch the sides without further help or action from the government.
The way businesses get contracts was a real eye opener. They are even more exposed than residential. Many will have no choice but to fold which will add even more pressure to an economy predicted to be in recession all of next year.
I don’t mean to keep taking it back to the government, but this should be being treated in the same way we did the pandemic. An absolute emergency. This pissing around talking about Macron in a hustings is irrelevant. If I were in Truss’ circle of advisors, presuming she wins, I would be saying that unless she gets working on this now, she’s going to face the most uncomfortable of any opening I think an incoming new leader has faced in a long time. She will pretty much inherit zoo oak unrest and potential riots imo.
Unemployment could certainly spike if businesses can’t afford to pay energy costs, it’s a vicious circle, need some smart bods on the case, the knock on effect is huge.
Windfall tax on all businesses making huge profits, higher tax for those top earners who have the broadest shoulders, increased tax on unearned income, increase tax thresholds which are ridiculously low, increase minimum wage as nobody working full time should be in the position of needing to claim benefit.
How the hell did you ever vote Tory?
The current marginal tax rate for top earners is 48.25% - I have no issue in raising that but it really doesn't solve the problem because the revenue generated would be a drop in the ocean and the law of diminishing returns kicks in - it's been tried before and tax revenue actually drops.
For windfall tax read increases in corporation tax rates (and dividend income should be taxed at the same rate as normal income) - no issues with that as long as it doesn't stifle investment. Increase capital gains tax - no issues with that at all.
A discussion for another day/place Bob but I don't think Laffer Curve economics is held in particularly high regard by the majority of modern economists. And certainty not the "trickle down" version that has never worked anywhere but still seems to have its fans both inside and outside government.
Apparently there is an article in The Telegraph which is behind a paywall but apparently it describes an average family which would have to be spending at least £31,200 a year on top of their accommodation expenses (mortgage/rent which doesn't attract VAT) in order to save £1,300 through a 5% cut in VAT. That is impossible for a huge number of families.
It is simple economics that if you can't afford to buy a product in the first place, you can't benefit from a VAT cut on that product.
Comments
Will barely help the worst off, but will cost the country a fortune in future. If true, it simply reinforces how utterly thick that woman is, as if there were still any room for doubt .
I expect this will be proposed, ridiculed, explained as having been misinterpreted and then quietly put away, like most of the other shit ideas she's had.
The screamingly obvious simple solution is a windfall tax on the producers used to reduce the price cap and making distributors whole on the shortfall in costs. I'd also introduce a cap on business energy costs to reduce insolvencies, even if it's higher than the domestic cap.
If they do nothing, costs to the NHS will shoot up if we have a cold winter (and the perfect storm of all the shitness of the last few months suggests sods law can be confidently applied) as old folk are carted in with malnutrition or hypothermia.
windfall tax?
lowering of the cap profit from 1.9%?
Larger universal payment to households ?
means tested payments to households?
income tax reduction,?
Reducing VAT is a good thing to do to help the poorest. It isn't enough though. It also helps businesses, which is also good.
It will need to also be met with targeted support to those most in need with energy bills though.
If VAT was being increased, I am sure there would be plenty on here stating that point.
Don't just take it from me though, take it from a source that hopefully most of those with their usual axes to grind can listen to, the European Parliament.
https://www.europarl.europa.eu/workingpapers/econ/pdf/103_en.pdf
I'm sorry, this is simple economics and to argue otherwise will be done purely from a position of either willing or unwilling ignorance. Take your pick.
But the energy price rises is beyond that with crazy numbers being provided and the way they are arrived at makes them reliable crazy numbers. You need to freeze the cap to deal with these and aligned with a VAT cut, it could help steer us through this major crisis.
If you can't afford to buy a product which has a VAT cut, you are not going to benefit from that VAT cut.
Businesses don't have to pass on the VAT cut anyway, as frequently happened when VAT was cut as part of the Covid relief.
A 5% VAT cut ain't going to touch the sides without further help or action from the government.
Isn't it the chairman of BP?
Those in power might look at street sleepers and declare ‘energy costs are not a problem for them, so it shouldn’t be a problem for anybody else’.
It is simple economics that if you can't afford to buy a product in the first place, you can't benefit from a VAT cut on that product.