sirscot A Short History of V.A.T.: VAT is Westminster’s third largest income stream after Income Tax and National Insurance. VAT income was £87.7 Billion in 2013/14 – which was 13.26% of Westminster’s total income. VAT is a tax on consumption i.e. we pay it when we buy goods and services from vendors who are unpaid tax collectors with a legal obligation to charge it and pay it to Westminster if their turnover is £81,000 or more per annum. The current rate of standard VAT since 1.1.10 is 20% - which is 5% lower than the minimum VAT rate set by the EU. VAT is a ‘Regressive Tax’ i.e. poor people are compelled to pay a higher proportion of their income on VAT than rich people. VAT replaced ‘Purchase Tax’ which was calculated and collected between 1940 and 1973 at the place of manufacture, unlike VAT which is calculated and collected at the point of sale. Purchase Tax was set at 33.3%. It then rose to 66.6% and to it’s maximum of 100% in 1943. Purchase Tax stood at 25% when it was preceded by VAT when the UK joined the EU on 1.1.73 at a rate of 10%nset by the Conservative government. In 1974 the Labour government reduced the standard rate of VAT from 10% to 8% - but introduced a new ‘Higher Rate’ of 12.5% for petrol and “Luxury Goods”. In 1979 the Conservative government raised the standard rate from 8% to 15% and abolished the higher rate. They then increased it to 17.5% in 1991. During the 1992 general election ‘Debate’ the Conservatives promised not to extend VAT to non-luxury goods such as domestic fuel and power. However, in1993 they apparently reneged on their promise and made householders pay VAT on their domestic fuel and power bills at 8% rising to the full 17.5% in 1995. However, the Conservatives plan to raise the rate to 17.5% was scuppered after it was voted out in parliament.. The point to consider here, which has been little reported - is ‘why did they want to make this increase’? It certainly would have helped make good the Massive Black Hole in the government’s finances after the punitive and abortive Poll Tax Misadventure. However, historically – it may also be seen as a punitive if not vindictive attack on the poor and vulnerable who would have been hardest hit by the increase on their consumption of essential heating of their homes – maybe for revenge for protesting against and bringing down the Conservative Flagship ‘The Poll Tax’?... During the 1997 general election ‘Debate’ Labour promised to reduce the imposition of 8% on domestic fuel and power to 5%. The Labour party later reduced the standard rate of VAT from 17.5% to 15% in 2008. Thereafter, Labour raised the standard rate from 15% to 17.%% on 1.1.10. During the 2010 general election ‘Debate’ the Conservatives denied that they would increase VAT. However, Conservative Chancellor of The Exchequer George Osborn raised VAT from 17.5% to 20% on 4.1.11. (Reminicent of 1973) which prevails today. We are in yet another general election ‘Debate’. Politicians of all colours know that VAT is regressive and it will have a greater if not detrimental effect on those in society who have already been unequally disadvantaged by the current UK government’s policies. Accordingly, politicians party to said ‘Debate’ would be wise and prudent not to ‘Crush’ the lower echelons of UK society, the “Hard Working Families”, the “Aspirer’s,”, “The Doers” – because these are the very people who do consume, who do dispose of 100% of their income, within the UK and their spending is the life blood of the UK economy. Politicians party to the current ‘Debate’ would be far more constructive and fiscally prudent to repatriate the unpaid £Billions from offshore tax havens… which was of course one of Mr. Cameron’s promises… But, VAT is still the question on the lips of the ‘Big Beasts’ of political chat shows on TV. Consider this short video where a Labour politician (Chris Leslie) party to this ongoing ‘Debate’ is asked “Would Labour increase VAT after the next general election”: https://youtube/watch?v=GtTWqGg01C0
Posted on: Thu, 11 Dec 2014 06:00:30 +0000
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