I disagree entirely with the rise in VAT (sales tax to readers abroad) from 17.5% to 20%. It’s just plain stupid.
It’s rare you get people from left and right of the spectrum agreeing with each other, but when the likes of Guido and the Taxpayer’s Alliance are lining up with the Trade Unions and Labour MPs to condemn the VAT increase, you’ve got to sit up and take notice.
VAT is a regressive tax. That means it hits the poorest hardest because they spend more money on VAT chargeable items than the rich. A rich guy might not notice the cost of his shopping or his petrol rising by 2.5% overnight. But the poor, and even the middle classes, sure as hell will.
More than that, it’s just plain stupid. The economy is — just — in recovery from the worst recession in living memory. Is slapping an extra 2.5% tax on every product bought and sold in the land really going to aid that recovery?
VAT is the most offensive tax to me. Worse than income tax. Because every time I hand over a banknote to pay for something I’ve bought with my hard earned money, I’ll be thinking of a government agent dressed like a 30’s gangster putting a gun to my head and demanding 1/5th of everything I spend as “protection”. At least the income tax man only comes knocking once every year.
I’m angry about the rise in VAT. I know that Labour’s ridiculous overspending and inability to balance the books led us to this, but the rise in VAT is just plain unfair, regressive, and counter-productive to a recovering economy.
In my mind it’s the first bad move the coalition has made.
Let’s not even get started on capital gains tax. Yeah, it’s a tax on fuckwad property developers, but it’s also a tax on entrepreneurs and small business owners like me, too. The acumen to help the wider economy by growing your own business should not be punished. It’s a tax on aspiration. The government should reward people who want to get rich through hard work, not punish them.
But it’s an interesting point. Who gets clobbered more? Is it the poor, having to pay 2.5% more for pretty much everything, or is it the rich, who have to stump up over a quarter of the fruits of their labour when they come to sell their businesses? Arguably, both taxes are pretty immoral and harmful to the economy. People will buy less, and entrepreneurs will be less motivated.
In short? Whenever tax rises, the economy contracts. Whether that’s because people are buying less or working less hard is irrelevant. The British people are already taxed to the eyeballs. Is there such a thing as a fair tax? It depends on where the money is going. If we must pay tax, how come we get so little say in where it’s being used? People might actually vote for an increase in tax if, say, the money was being spent on better schools. But the majority of government projects are vast, over-managed black holes into which tax money never comes out again.
At least this government had the bottle to institute some cuts. Although as the Libertarian Alliance points out, “overall Government expenditure is set to rise from £637bn to £711bn over the five-year term – a mere £74bn increase (that’s well over 11.5pc).”
There’s a simple solution to cutting tax. Put more of the vast machinery of the state into private hands and make people pay for what they use. Should I, a single, childless man, be made to pay for your schools, or your marital tax breaks? Where’s the fairness in that? Come to think about it, why should someone who hasn’t used the NHS in years still be funding it? The British economy is closer to collapse than it has ever been. Drastic times call for drastic measures.
We can cut tax. We just have to start cutting government, as well.