The VAT argument bubbles along

toco

The choice was do something about our overdraft or suffer humiliation like Eire and Greece following dodgy administrations.We British don't fancy humiliation but Red Ed and his mates the trades unions have it in their genes.Thank goodness for sensible government so lots of compliments go to the coalition.

old fogey

Mr Forsyth the second paragraph, "Alan Johnson has not had a good day....a chance to go on the attack" is puerile drivel. Is this what The Spectator's political discussions have come to, a day by day Adrian Mole type record owing more to boxing comparisons and the transcience of the pop music charts?

Holly ......

Who's arguing?
They put it up,we pay it...END OF!
next!!!!!

Nicholas

Yes, toco, but why not do something about it by cutting billions in foreign aid to nuclear powers or taking a bigger, sharper, faster axe to the quangos, or telling Brussels to shove off and get lost. No, instead a so-called Conservative-led government prefers to raise taxes. It's now 20%. Compare European VAT to sales tax in countries with more dynamic approaches to letting enterprise and markets flourish. Where will it go next - 25%, 30%?

We are under the dead hand of Europe, supporting the burden of excessive government not just here but there too. We have become continental to precious little advantage and sucked into their turgid markets with overwhelmingly socialist policies, curbed freedoms and tax burdens. Meanwhile we still have gobby unions impeding progress. I expected more from a Conservative-led government.

Nickle

If it gets the blame there is a simple solution.

Introduce a debt tax, and send everyone an annual statement as to their part of the government debt they have to pay off.

Nice snazzy name needed. Labour tax? Has a certain ring. Brown tax?

Yep, that pins the blame.

2trueblue

For goodness sake the BBC have flogged this item to death and done Liebores work. It is now boring, move on.
For a different tack you could go on about the taxes that Liebore had put in place that will come into play this April. We could also pretend that Liebore have any ideas about how we can crack on with reducing the defecit which they built up. You could also remind us how much the debt is growing day by day. No, don't bother, that would mean engaging brain.
For goodness sake we need less drivel from the speccie.

JohnAnt

This is a rise of 2.08% (not 2.5%) in the cost of full 17.5% VAT-able goods.
Essentials - such as food, rents, medicines, transport, heating - have been rising at 5% per year for several years under the previous government (and this one) without the Bank of England caring a tinker's curse, and nary a Miliband or Johnson of any ilk to lament it until now.
Budget, save, google for bargains, spend only within means.
Osborne is right in principle - NIC and income tax should be lowered well before VAT. We should be price competitive with the rest of the EU, which has higher VAT/sales tax percentages than we do. Could do better.
Raising VAT could be a usefully deflationary move for the UK.

Sir Everard Digby

Would those filling the media with this argument be the same people who said the 2.5% reduction from 17.5% to 15% was insufficient to have much effect back in '08?

TrevorsDen

Once out of the bottle the genie will not go back.

Govt spending, VAT, its all the same. We can expect any wriggle room to go on lowering income taxes. I would hope that this will go on a big increase in allowances.

Of course the logic of VAT or any purchase tax is to tax everything, from buying a house to a toilet roll at a uniformly lowish rate.
As a result we see that perversely people who work are persecuted by low allowances and high tax rates.

Real allowances should double and tax rates should halve. better still abolish income tax all together - except for bankers of course.

AndyinBrum

Why should the press be exempt from VAT?

Tony_E

VAT is hardly an issue at all in rising prices, 2.08% as quoted by John Ant above is as nothing in comparison to inflation.

Inflation however, is here to stay. It is government policy to inflate ourselves out of our Sterling based debts. That is a main contributer as to why interest rates are still so low, despite the price rises we are all seeing.

The problem is that our currency no longer buys very much, and we import nearly everything we buy - and QE is the reason for that. Plus, because fuel is quoted in dollars, we are going to find it more and more difficult to compete in manufacturing because the cost for imported raw materials and energy is set to rise steeply. Fuel will also feed into food prices because of transport costs. Insurance is rising fast, so anyone who runs a business is going to have to pass that on as well.

The cost of everything is rising - VAT is largely insignificant in mathematical terms, but that will not stop it scaring the life out of the herd.

michael

Having added on £10 vat onto the family budget this tenner represents 1.7% of families weekly spend on adult taxables... fuel transport then the non essentials booze fags etc.
IF £10 is 1.7% of this spend then the spend on the 'value added' bit of this lifestyle £588.24 per week........poor beggars.

Jonathan Woolf

Instead of speculating pointlessly on what some people might think over the next few weeks about a VAT rise, how about considering whether or not it is a sensible thing to be doing? True to form, the Coalition's tax rises (on top of Labour's) are proving to be very real, but the "cuts" we hear so much about are proving to be nothing but empty talk. All it takes is a bit of whining in a newspaper to elict a swift about-face by the relevant spineless minister. I suspect in 3 or 4 year's time, the actual ratio of cuts vs tax rises that went towards closing the deficit will be skewed heavily in favour of the latter. There is a massive inherent bias towards ever-increasing size built into bloated Western governments and far more radical action is needed than anything planned by this weak and soggy Coalition regime. In three to four years we'll see the results. Government debt will still be enormously greater than now (even if the deficit closes, you need surpluses (look it up in the dictionary James) to reduce overall debt), Labour and the unions will still have their public sector client base, the state will still represent about half of GDP, the private sector will still be weak, growth anaemic, our brightest and best people and businesses will have left, we'll still be spending vast amounts on energy bills to subsidize the building of useless wind farms at the same time as enduring power cuts as the EU closes half our power stations, the EU will still write all our laws and spend increasing amounts of our money, etc. etc.. Essentially, not much will have changed since the days of Brown. So what was the point in voting Conservative in 2010 - it certainly hasn't resulted in a Conservative government. Alastair Darling would be doing pretty much what Osborne is doing, and I don't think Miliband Senior would be much different from Cameron.

Unless something is done about the tiny patrician elite, educated at the same schools and universities, none of whom have ever had a real job, who currently dominate all three parties, I can't see anything changing regardless of for whom we vote.

TomTom

The main thing is for the Government to keep spending and taxing. The more money the Government raises in taxes the more it can spend. This is the First Rule of Government. Spending gives politicians Power and Power gives political parties donations.

The increase in tuition fees and VAT is just the start. VAT harmonisation across the EU at 25% will probably be in place by 2015 and Europe will be a high-tax, high-spend economic zone in perpetuity.

The "Deficits" will never go away and they will ensure taxes will never be low. The banks have undertaken the largest Leveraged Buyout in world history and brought sovereign states onto their balance sheets. With this kind of funding starting another speculative bubble in dot.com shares using Facebook should be well within Goldman's grasp, circumventing Securities Laws as they have done by warehousing Facebook unquoted stock.

VAT increases are essential to suppress domestic demand and transfer real resources from the public to the Treasury-Bank-Nexus which is funding the whole circus through high-powered money and proxy taxation through speculation-driven increases in food prices and energy costs.

The New Global Order is coming into being and the West is returning to a form of feudalism as Asia turns feudal society into imperial power by securing global mineral resources.

Putin's Russia is the model for the future

Baron

Nicholas, sir, a word in your ear: most of the foreign aid is a disguised export subsidy. The aid money must be spent on stuff made here, support for jobs, the argument goes.

also, you should favour VAT, the higher the better provided income tax gets the lower the better. It makes sense to tax consumption rather than wealth creation, don’t you think?

Nicholas

Agree with both Jonathan Woolk and TomTom. The future is East Germany 1960 - all the parties are taking us there.

DZ

Right on the button Nicholas 9.24, what indeed happened to the Bonfire of the Quangos? And the compression of Local Authorities. Not to mention the costs of totally absurd Elfin Safety legislation. And that was supposed to be just for a start. Remember?

alexsandr

Most of the big rise in stuff this week has been in petrol/diesel proces. that was a fuel duty increase. f-all to do with VAT.
Why has that been kept quiet?

TomTom

"must be spent on stuff made here, "

NOT with British Foreign Aid...maybe Japanese or French, but NOT in the case of the UK

Marcher Baron

I've only bought a couple of VAT-rated items over the last two days. Neither of them was more expensive than what I'd previously paid (although VAT was quoted at 20% on the receipt). Clearly some retailers are absorbing the rise at the moment. Inflation will be much worse than the VAT rise. What worries me more is the harmonisation aspect; VAT is currently 20% throughout the EU, I believe.