Comments on: Top Tory’s VAT plan would leave poorest 30% worse off

By: To defend the cuts, Labour must be clear about the size of government | Left Foot Forward

Fri, 11 Jun 2010 13:08:27 +0000

[...] or say how taxes would go up further. In which spirit, instead of the VAT rise, which would be deeply regressive, I would instead pick a wealth tax. As the Political Climate blog points out, “recent data [...]

By: The progressive case for a rise in VAT | Westminster Blog | FT.com

The progressive case for a rise in VAT | Westminster Blog | FT.com — Fri, 11 Jun 2010 12:46:32 +0000

[...] or say how taxes would go up further. In which spirit, instead of the VAT rise, which would be deeply regressive, I would instead pick a wealth [...]

By: John77

John77 — Wed, 07 Apr 2010 20:52:44 +0000

Will,
Diversionary tactics do not explain your apparent memory loss.
I have no idea whether or not Malthouse is a crank because I have never met him.
Malthouse is not in an elected office. There are roughly 200 Conservative MPs (yes, they are still in office) more than a score of County Council leaders and a hundred or so (unlike Labour ones there are too many to count in the middle of posting) district or metropolitan council leaders. So he is closer to Hartlepool United than Blackburn Rovers.
My previous comment is not, as you try to suggest, self-contradictory. The UK Conservative and Unionist Party (not being totally insane) has always included ability to pay as an essential parameter in taxation policy and, while switching totally to direct taxes has worked rather well for Bermuda, it is quite happy with taxing the rich at a higher rate than the poor – in general you might notice that, unlike New Labour, it tends to avoid direct taxes on the poor. On the other hand, while not endorsing the idea that we might copy Bermuda, I was pointing out that you had GOT YOUR SUMS WRONG AGAIN.
You seem to ignore the zero-rate tax on most “necessities”; VAT is, in reality, mildly progressive (in poor countries UK VAT rules would be significantly progressive); the progressive nature of VAT is concealed in the ONS figures by (i) the reference to a year where mortgage payments were an unusually high percentage of income and expenditure for the higher-income groups (ii) inclusion in the lower decile groups a significant number of people excluded from means-tested benefits because they had savings: the bottom decile paid over 70% of gross council tax assessment and the next decile paid over 65% – as exemptions include student households as well as those on means-tested benefits that implies that significantly more than 705 of the bottom decile and more than two-thirds of the next decile had low incomes because the Labour government made a policy decision that they should live off their savings. Those who paid stamp duty on house purchase were not living on the breadline, nor were those who paid EMPLOYER’S national insurance contributions.
I do not know why Osborne flirted with flat taxes as I have never met him – maybe you should ask him, you are much more likely than I to meet him: it’s more than ten years since I last discussed fiscal policy with a Finance Minister – but Tony Barber’s idea of a guaranteed minimum income to cover basic needs and a flat tax rate of, say 30%, on all other income does have its intellectual attractions (provided that we do not get a million Sarah Palins as a side-effect) and it would be far better than the 71% or 81% effective marginal tax rate on low-paid adults – no total destitution, no disincentive to work because the non-tax-deductible traveling costs exceeded the net after-tax salary, etc etc.
I do not advocate a move just to indirect taxes but VAT is NOT, nor would a move to it be, deeply regressive as anyone who looks at the figures and can do the sums I learned to tackle when I was 7 can tell you. The most regressive tax is tobacco duty (as a lifelong non-smoker, I feel disqualified from commenting further).

By: Liberal Conspiracy » Tesco rejects Tory National Insurance campaign

Liberal Conspiracy » Tesco rejects Tory National Insurance campaign — Wed, 07 Apr 2010 18:32:28 +0000

[...] Many Conservatives have instead touted increasing VAT, which would disproportionately hit poorer households. [...]

By: Will Straw

Will Straw — Wed, 07 Apr 2010 18:25:04 +0000

John – You seem to be arguing two things at once. First, Malthouse’s idea wouldn’t be so bad, after all. Second, Malthouse is a crank and the Tories have always been committed to fair taxation. On (1) are you seriously suggesting that moving towards more VAT wouldn’t be deeply regressive? On (2) Malthouse is one of the most senior Tories in office in the UK. And if flat taxes are an unBritish idea, why did Osborne flirt with them in 2005?

By: John77

John77 — Wed, 07 Apr 2010 15:50:24 +0000

Sorry – typo “omits two-thirds” started off as “only includes two-thirds” and should read “omits one-third”

By: John77

John77 — Wed, 07 Apr 2010 15:43:06 +0000

Will Straw,
If you didn’t think anything in that article is inaccurate then it can only be because you stopped thinking while you penned that reply. The ONS data that you cite quotes a figure of 7.9% for the percentage of spending by the bottom quintile absorbed by VAT. ONS THEMSELVES state that the income figures for the bottom quintile are seriously understated because their data on income omits two-thirds of the tax credits paid by HMRC, of which the large majority (I hope!) goes to poorer households, so the income of the lower deciles is understated and the %age absorbed by taxes is overstated. VAT is less than 30% of the tax paid by the each of the bottom two deciles. In fact, according to ONS, the direct taxes paid by the bottom quintile exceed the amount that they pay in VAT! Kit Malthouse is not a “Top Tory” – second division at best.
The Conservative party in this country has since its creation in the Nineteenth Century always supported the concept that taxation should be based on the ability to pay. The flat tax philosophy is supported by the “Conservative Party” in the USA which is unconnected to the British Conservative & Unionist Party.
Apart from the last couple of points, I have told you all this before. You are too young to be suffering memory loss due to Alzheimer’s disease, so why are repeating claims whose errors I have already explained to you?

By: Will Straw

Will Straw — Wed, 07 Apr 2010 13:10:21 +0000

Anon,

We want you on here adding your strongly held thoughts and analysis of our pieces but please do treat our authors and other commenters with respect. It’s not too much to ask.

All the best,

Will

By: Shamik Das

Shamik Das — Wed, 07 Apr 2010 11:30:57 +0000

“Will – Don’t stoop to telling lies – you’re not Shamik Das”

Anon, libel me again and you’re out.

By: Anon E Mouse

Anon E Mouse — Wed, 07 Apr 2010 11:04:18 +0000

Will – You banned me for telling you to bugger off as I remember but in any event if we are to believe what we are told then Labour will give us a referendum on Lisbon…

You get the point…

I’m also glad you’re no longer ignoring me dude! Thanks man.