Proposed Vat reduction

[rualexander]

But with inflation at 10%+ a cut of 5% to VAT is going to be of no use to anybody

 

[Deleted member 26715]

But with inflation at 10%+ a cut of 5% to VAT is going to be of no use to anybody

If you don't want your 5% I'll have it

 

[BoldonLad]

That was exactly my point. Without clarifiction, the figures are all just smoke and mirrors. What I can't work out is why all the media, with supposed respected journalism, have all just quoted Govt sources with no challenges or calculations at-all.

Journalism died years ok in the UK, it is just recycled press releases and clickbait now.

Edit: I see several others have beaten me to that conclusion

 

[PeteXXX]

Every little helps..

 

[rogerzilla]

VAT is a funny tax because it's claimed to be regressive or progressive depending on whose opinion you listen to.

Figures based on income deciles show it's really very regressive, so an overall cut benefits those with lower incomes more.

 

[markemark]

It will benefit consumers if businesses drop prices accordingly. It will benefit businesses and not consumers if the businesses maintain prices and pay less vat to hmrc.

Answers on a postcard to which is more likely.

 

[Deleted member 26715]

Answers on a postcard to which is more likely.

I'd just like them in terms thick ****'s like me can understand

 

[figbat]

Would this 5% reduction also be applied to domestic electricity and gas? Some big savings to be had there. And on road fuel.

 

[byegad]

5% off energy bills is extracting the urine. If our energy bill goes up by 500% which has been predicted knocking 5% off is beggar all. In the meantime, our bill has gone up by 500% and so has the HMRC's take on VAT on the bill. Knocking it down to 4%, rather than 15% (Assuming VAT is 20% on fuel bills! 20-5 = 15) would leave HMRC with the same take in £s as pre- the price hike.
Additionally any VAT reduction benefits the rich, who say heat their stables, much more than the poor.

 

[BoldonLad]

5% off energy bills is extracting the urine. If our energy bill goes up by 500% which has been predicted knocking 5% off is beggar all. In the meantime, our bill has gone up by 500% and so has the HMRC's take on VAT on the bill. Knocking it down to 4%, rather than 15% (Assuming VAT is 20% on fuel bills! 20-5 = 15) would leave HMRC with the same take in £s as pre- the price hike.
Additionally any VAT reduction benefits the rich, who say heat their stables, much more than the poor.

VAT on Domestic Electricity and Gas is currently 5%

For Business, VAT on Gas/Electricity is 20%, but, presumably, is reclaimable as it is a VAT input tax.

Domestic fuel oil, coal, wood, I don't know what rate applies.

Edit: I am informed by @figbat , that VAT on domestic heating oil is 5%

 

[figbat]

Domestic heating oil is also 5%, I have to buy this around 3 times a year. Right now prices are pretty high but not as high as they were a few months back, so that’s something!

 

[markemark]

I'd just like them in terms thick ****'s like me can understand

A pen costs, say, £1.20. The vendor is effectively selling it for £1 + vat. The buyer pays £1.20. The vendor pays 20p to hmrc at some point in the future. The seller makes a profit of £1 less the cost of the pen and other overheads.

If vat is reduced to 15% the vendor has a choice. Reduce the pen price to £1.15 and the vendor then pays 15p to hmrc and the buyer saves 5p. The vendor notices no difference and makes the same profit.

Or, the vendor keeps the selling price it at £1.20. The vendor then only pays hmrc around 16p instead. The vendor makes an extra 4p (roughly) profit and the buyer notices no difference.

The same as the fuel duty drop. Did the garages reduce the price by 5p per litre or did they make an extra 5p profit?

 

[BoldonLad]

A pen costs, say, £1.20. The vendor is effectively selling it for £1 + vat. The buyer pays £1.20. The vendor pays 20p to hmrc at some point in the future. The seller makes a profit of £1 less the cost of the pen and other overheads.

If vat is reduced to 15% the vendor has a choice. Reduce the pen price to £1.15 and the vendor then pays 15p to hmrc and the buyer saves 5p. The vendor notices no difference and makes the same profit.

Or, the vendor keeps the selling price it at £1.20. The vendor then only pays hmrc around 16p instead. The vendor makes an extra 4p (roughly) profit and the buyer notices no difference.

The same as the fuel duty drop. Did the garages reduce the price by 5p per litre or did they make an extra 5p profit?

Perhaps you have simplified, for the sake of explanation, In which case, please ignore this post.

Unless the calculation of VAT has changed since I ran my own little company, it is not quite as simple as that, you have omitted the vendors 'input tax' which is deducted from the 20p VAT, and the net amount goes to HMRC. Either way, the buyer of the pen pays the 20p VAT (unless they are a VAT registered trader, and the pen is a business expense or component).

 

[chris-suffolk]

I think the ONS figure is based on income after housing costs have been deducted.


Average household income is not a very useful measure as this lumps together single parents with young children and middle aged couples with two sons or daughters living at home and earning a good wage. Families in that position without a mortgage could have a family income of £100k+ which pushes the average up.

According to the figures I saw, disposable income is calculated after Tax, NI and Council Tax, but not Mortgage / Rent. Even so, it still seems high. That would give Mr & Mrs average a gross income in excess of £55k, which seems high as an 'average' (they used 'Median' as their average, not 'Mean' by the way)

 

[markemark]

Perhaps you have simplified, for the sake of explanation, In which case, please ignore this post.

Unless the calculation of VAT has changed since I ran my own little company, it is not quite as simple as that, you have omitted the vendors 'input tax' which is deducted from the 20p VAT, and the net amount goes to HMRC. Either way, the buyer of the pen pays the 20p VAT (unless they are a VAT registered trader, and the pen is a business expense or component).

Yes indeed. The vendor pays 20p tax to hmrc for the pen. The vendor can reduce their vat payment by claiming back from their purchases etc but the 20p is paid.