20 percent Vat is likely whoever wins the next election

Publius

Won't increasing tax decrease consumption yet more, and thus decrease tax revenue?

Quite apart from that, VAT, particularly at 20%, hits the poor hardest. Presumably, then, such an increase in VAT would be accompanied by another extension in the vast cat's cradle of benefits and incomprehensible tax credits, so that even more of the population become wards of the state.

So no! I am not voting Tory for taxes to rise, particularly not when money is being dished out on such questionable projects as foreign aid and an EU budget that is never approved by its own auditors.

Moreover, it is particularly galling that I should be expected to crush further my already crushed finances in order to assist banks who continue to award themselves vast salaries and bonuses.

Steve Tierney

>>The Tories should be prepared to be frank about this but balance this with a commitment to reducing the overall tax burden over the next decade. <<

That's pretty much exactly what I said over on ConHome.

Pat

If they tax us anymore the country is going to bleed. We need lower taxes and cuts in expenditure. We need smart thinking to encourage new business and incentives to help people start a business. I dismay at the backward thinking of both major parties. It is business that will get us out of recession, not higher taxes.

colin

Raising tax should be a last resort. The economy is still very fragile and will remain so for quite some time. Millions of citizens are deep in debt, many of them with no prospect of paying down that debt in the foreseeable future. More tax is the last thing they need.

The first port of call for balancing the books should be serious cuts in, and in some cases, a re-prioritization of public expenditure.

The tories should have a go at that, before coming after us for more tax, otherwise, they'll be lucky to see through one term.

Susan Hill

The High Street will just love that.

John Moss

Raising taxes is pointless. They are already too high.

Spending constraint is essential and Osborne ought to be considering a cash freeze at 2010-11 levels for the next following three years. That saves £107bn.

Add to that a growth strategy with Corporation tax cut to 10% and VAT cut to 5% on construction or plant and machinery and you have a recipe for faster recovery and higher growth as well as reduced spending in real terms.

Andy Leeds

Taxes have to go up no matter what. This shower have made such a mess of the States finances there is no choice. BUT there also need to be ruthless spending cuts. I also think we need to cut down the size of the state and this needs a radical reappraisal of health and education.

TrevorsDen

"hits the poor hardest. " - it is not set on food or children's clothing.

It is applicable to luxury holidays in Corfu (unless you have a friend who pays for it for you)

So how does it hit the poor 'hardest'?

Increasing tax does inevitably mean that there is less discretionary spending elsewhere though. So does it really make sense to increase the take? If we spent less money in Corfu I suppose it might.

Verity

Or ... they could slash the public sector by 50%. That would save a whole gang of money, and putting these unemployables, like diversity coordinators and Urdu translators on the dole is much, much cheaper than giving them salaries.

Every quango shut down with a padlock on its door by this coming Friday.

Illegal immigrants and "asylum seekers" swilled out by the boatload.

SPADS and similar paid for out of the salaries of those they are advising, not the taxpayer pocket.

Cut the number of MPs by one-third.

Are "classroom assistants" or whatever they're called really necessary?

Billions could be saved by getting these individuals off the public payroll. This would include reneging on pension commitments for them. Such is life.

Publius

@TrevorsDen
"So how does it hit the poor hardest?"

Why are you sneering? The poor do not only spend their money on food and children's clothing. Nor is VAT only chargeable on "luxury holidays in Corfu".

Somebody on, say, a million a year, needn't worry much about VAT going up to 20%. Someone trying to get by on 8000 a year will be hit hard.

Henry

Audit governmnet expenditure, take an axe to the vast amounts of money which is currently wasted on quangos, management consultants, (add your own, the list seems endless) then if the situation is still bad come back and talk to us about raising yet more taxes.

But not until then. The vast majority of us have already had the shirts stolen off our backs over the last 12 years.

Enough is enough.

Fergus Pickering

Any tax on expenditure is likely to hit the poor rather than the rich. Any tax on saving is likely to hit the rich rather than the poor. The poor spend their money. The rich save it. QED

Verity

Wot Henry said. Come back when you've slashed the payroll, including the pensions of those let go.

Stephen

Verity

You want to reduce the number of MP's by over 200 which will mean that constituency boundaries will need to be redrawn. But you also want to close all quangos immediately. So with no Boundary Commission (a quango), who will do the work? And who would pay for it?

If only life were so simple.

Emil

"Every quango shut down with a padlock on its door by this coming Friday."

Taking Government Procurement procedures into account we pay well over the odds for padlocks, H&S training, plus a few weeks consultancy , risk assessment, and other sundry expenses. I'm sure that complete knob Toby Young, and Compass, would come up with a squillion page report on the subject as well, GIGO.

Verity

Stephen - "So with no Boundary Commission (a quango), who will do the work? And who would pay for it?"

Well, the government would pay for it, obviously. What are civil servants for? I said slash the public sector by half. That means there would be half left to do actual work. Or they could set up a Parliamentary committee to do it. Or they could hire, ON A ONE-TIME basis, a law firm to do it.

What does the Boundary Commission do that another qualified body cannot be paid, on a consultancy basis to do? What does the Boundary Commission do all year anyway?

Laughing Gravy

Whether public spending is cut by government action, or private spending is reduced by tax rises, aggregate spending is reduced and aggregate demand is affected. There is considerable evidence that, in the medium to long term tax rises are more detrimental to the growth of economic activity than spending cuts. But in the short term, a huge public finance deficit is more detrimental than tax rises provided that the rises are clearly to assuage the deficit whilst the finances are brought under control. It is no use crying out for immediate spending cuts. Capital spending can be reduced quickly, but recurrent spending takes longer. Many areas are protected by legal requirements. Just take the oft quoted example of reducing the number of MP's. The next election will return the same number as now, and almost certainly, legislation will be needed to reduce the number. Lets give David Cameron a fair wind on this, and realise that it will be very hard to get the books balanced again. Politics is the art of the possible.

TomTom

VAT on newspapers and magazines and prescriptions as in Germany and on rail fares and student tuition fees....time to stimulate a real taxpayer revolt !

Andy Leeds

A good example of waste and incompetence is the Commission for Equalities and Human Rights. Its budget of £70 million is far more than those bodies it replaced. One does wonder what they do with £70 million a year. It seems not even the Audit Commission is sure.

Seasurfer1

An interesting one is that all PFIs will have to be requisitioned vis-a-vis Nationalised!

Athesius the Facilitator

Verity. I'll tell you what the Boundary Commision do. Nothing that's what. Diddly Squat! Nothing! It's the Groundsman and the Umpires that decide on the boundary markings. They know the ropes.

I agree totally with you. As I have said before I work in the civil service, it's a shambles believe me.

Colin

Publius@@

You're talking (writing) rubbish. You're spouting similar nonsense to the old, tired, left wing myth that the poor pay more in taxes than the rich or indeed the middle classes.

I'd be happy to see VAT increased to 22%, (with targeted decreases in some key areas) with a corresponding 4.5% decrease in income tax - top and base rates.

In time, I'd go even further and introduce a flat personal tax rate of 10%.

We are already massively over taxed and the benefits we receive in return are not good enough.

As I've posted earlier - governments should be compelled to reduce costs and improve services. Increases in taxation should come only after all other options have been exhausted. To date, as an electorate, we've behaved like compliant, ignorant sheep, allowing dishonest, incompetent politicians, at all levels to waste OUR money, on the creation of client economies. We should wake up and take more interest in how our country is run.

Stephen

Athesius the Facilitator
Fun post and particularly poignant today.
I agree with you that the Civil Service is a shambles but my point to Verity is that a simplistic 50% cut in public sector and a draconian 'shut all quangos' without considering which functions have to be carried out by someone is not a policy for the real world.

Verity - I'm surprised to see that you are not averse to taxpayers money being spent on even more consultants.

Verity

Stephen, I see that English comprehension is not your strong point, so I will put it even more simply: When there is a need for a function normally - I use the word "normally" in jest - performed by a quango, that job can be put out for tender among private consultancy firms. The winner of the bid will perform the task for that ONE PROJECT ONLY. When it's completed, the team that worked on it will be dispersed as a team.

It is in the nature of quangoes to be be self-perpetuating and ever seeking ideas for expanding their sphere of influence, hiring ever more people and upping their revenues from the public purse.

Would you, Stephen, care to give us a list of 10 quangoes whose functions could not be performed on an ad hoc, per project basis in the private sector for about 1/3 of what a quango costs?

Wyndham Lewis

The audit commission wouldn't know what is value, failure, good or efficient.

They are clueless with their badges and stars awarding authorities on the misunderstanding of auditors.

Dave B

There are studies around and I think it was also proven in the 80's with (I think) Lawson as Chancellor that if you put taxes down, more tax receipts come in because there is less evasion/avoidance.

Simplify the tax system with flat tax or some such (weren't the tories going to do this at one point), cut the bloated public sector and this is a much simpler way to recovery.

it's got to be worth a try, we've had 12 years of tax and spend and look where it's got us.

Chris lancashire

The gaping black (or Brown?) hole in the public finances dictates that taxes rise as soon as it is safe to do so. The huge cuts in public spending will take time to work through and, in the short term, a large public sector redundancy bill may even increase spending.
By mid 2010 the international markets will not tolerate government inaction. 20% vat is the best option - just as the reduction to 15% has resulted in little benefit, a rise to 20% will quickly bed in.

Minnie Ovens

Verity
August 9th, 2009 3:51pm
Or ... they could slash the public sector by 50%.

I am no economist and understand that Mrs Thatcher cut spending and raised taxes at the beginning of her reign, which helped stabilise the economy.
Maybe Labour, having learnt well from the Wilson/Callaghan years, really have done a much better number on the economy this time, so we may have to do this again.
But Liberty's point is well taken. Only today we hear of Government twisting rules regarding terrorism, to access private folk's email and bank accounts.
Government spending is wholly out of control.
It is bloated, corrupt, incompetent, inefficient with little priority or direction.
It keeps repeating dogmatically, "FEED ME!!" as the plant said in The Little Shop of Horrors.
We talk of home grown terrorism but it's not the Muslim population about which I worry most. It's all forms of UK Government terrorism, with over 50% of GDP going into its cavernous mouth.
This leads to an oligarchic despotism while starving an already emaciated private sector.
If this means cutting all those areas mentioneed by Verity and I think it does, I'm sure many of you can add to the pot.
And, before all in the Establishment wring their hands, let me reassure them that we can easily replace all of them with a far smaller amount of people who exhibit out of date qualities such as personal intelligence, life experience and basic common sense.
By the way, what was the Government budget in 1959 as a percentage of GDP?

Publius

@Chris lancashire
"a rise to 20% will quickly bed in."

By this way of thinking, any marginal increase in tax will "quickly bed in". 5% here. 5% there. Then another little increase when the first one has "bedded in". And then another. And another. Just as we have seen over the past years.

Fergus Pickering

I love this thing about Maggie's 'reign'. Why should increasing top rate income tax stop rich people working. Surely they'll just work harder to make more money. You lot all say how marvellous rich peple are. So why don't the buggers put their backs into it for the sake of England, Home and Beauty? Why would they be so unpatriotic as to move abroad? Or are they just sleazy greaseballs with damp palms and bad breath as I initially supposed.

Chris lancashire

Publius: I like tax rises as much as you appear to do but I recognise the present imbalance in public finances cannot be allowed to last very long. In the long term the answer is to slash the ridiculous size of the public sector and then reduce taxes. In the short term, the least worst option is to raise vat to 20%. Have you noticed the reduction to 15%?

Paul

Verity - I agree lets sack 50% of the public sector. Get rid of half the doctors, nurses, hospital porters, soldiers, police, teachers, coastguard, tax collectors, social workers, MI5, MI6, court service, DVLA, passport office, prison officers, Land Registry, jobcentre staff, firemen, local planning officers, food safety inspectors, offcie of fair trading, trading standards, border control officers etc etc

We'd all be much better off.

And no classroom assistants aren't necessary. As an alternative, you can a) have another teacher in a class at more cost b) have a teacher managing the class of 30 small kids on their own, less effectively