Regressive taxation
- Thread starter Ian H
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Once a Wheeler
New Member
GiveDirectly seem to agree with him. It seems the developing world may have much to teach us.
The situations are different, of course, but perhaps not that different.
The situations are different, of course, but perhaps not that different.
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ebikeerwidnes
Senior Member
Yes
People don't understand that companies price their products and services at the maximum that the feel they can get people to pay
people think that it is a sum of cost to make plus required profit plus tax but it isn't
hence they will tend to keep the price the same because that is what people will pay
just like happened when they dropped fuel duty by 5p
Also - people who REALLY need help but as few things as possible and a lot of those things are low to zero VAT anyway
but people who are having no problems will keep on buying - but, if it works and proces drop, then they will pay less
Hence it will mostly help out the richer people who are not having problems
not really what is needed
While businesses might aim to maximise profit, that does not mean maximising price, some have a low margin/high volume model: Primark, Aldi, Lidl
ebikeerwidnes
Senior Member
I agree - but they do it with a view of the whole system
so different companies use different techniques
but the price is determined by the overall profit of the item across all sales - not just the profit per item
so reducing VAT still has little effect in the long term
BoldonLad
Old man on a bike. Not a member of a clique.
- Location
- South Tyneside
An interesting claim.
If that is true, would the opposite (ie raising VAT) similarly have 'little effect in the long term'?
If yes, how about (say) tripling VAT, and, use the increased tax income to subsidise the fuel bills of the less well off?
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AuroraSaab
Squire
I agree. Reducing vat benefits those buying brand new big budget items like tv's and cars. As an aside, this is a similar reason to why some countries in the developing world don't have MOTs - it's seen as a tax on the poor. (It would be impossible to police in many of these countries anyway, obviously).
The only thing you could say for it is that it will boost consumer spending. Raising vat on luxury goods might reduce consumer spending, depending on what you include. In reality most companies will not pass on the savings of a vat reduction.
I can't see them doing much with vat other than minor tinkering.
The only thing you could say for it is that it will boost consumer spending. Raising vat on luxury goods might reduce consumer spending, depending on what you include. In reality most companies will not pass on the savings of a vat reduction.
I can't see them doing much with vat other than minor tinkering.
ebikeerwidnes
Senior Member
I would suggest that an increase in VAT would be implemented with gusto - probably plus a bit for 'rounding'
then it would settle again
whether or not it would settle back to where it was or to a high amount is probably something some highly paid people have studies in detail - but will keep their finding secret
dutchguylivingintheuk
Veteran
The system is still the same, the only difference is that discounters try to find a price point where people still experience the product as cheap and therefore are more inclined to buy higher volumes.
dutchguylivingintheuk
Veteran
The issue is not on the checkout but on the way to that point. If you look at europe for example you see that after the 2000's and 2008's financial crisises nobody really learned. The lessons is actually surprisingly simple, if you have relatively low debts you have a problem, if you have much debts your problem becomes the banks problem.
Similarly were stuck with houses that are worth more then what they should be wich result in higher rent prices hich result in bills not being able to get payed or no food on the table. Especially in the uk where the housing benefit is tied to the average rent price this is an vey important correlation.
So if the goverment really wants to solve the problem long term, they need to change the housing market, i don't make myself any illusions as if they ever gonna do that volumtary but if you look at hat is needed that would be the very first step.
ebikeerwidnes
Senior Member
I agree - house prices - and hence rents - are far to high in the UK
If I was in charge I would look at changing how much people can borrow and how the whole mortgage system works
e.g. if you have a house valued (at the time of purchase) of e.g. £200,000 and you borrow £170,000 on it
then you want to move but it is now worth only £150,000
then instead of being in negative equity - so you can;t move without suddenly owing £30,000 - then you are entitled to carry over the mortage in some way onto your new house
in some way
as yet to be determined
etc etc etc
it would crash house prices very quickly - but so what - I own a house and if it is worth x then another house currently worth x will pretty much still be worth the same as mine after the enforced crash
Probably not that easy
but I think a drop in house prices in a good idea - it is the problems it causes for people that is the problem that needs to be solved
OP
OP
Ian H
Legendary Member
At least she's being brutally honest about her real views.
Liz Truss says it is fair to prioritise tax cuts that benefit high earners more
https://www.theguardian.com/politics/2022/sep/04/liz-truss-energy-prices-action-plan
Liz Truss says it is fair to prioritise tax cuts that benefit high earners more
https://www.theguardian.com/politics/2022/sep/04/liz-truss-energy-prices-action-plan
dutchguylivingintheuk
Veteran
Not only in the uk, but because of the housing benefits system and de rents being adjusted to the houing rate it is more connected than other countries.
Short term limiting of borrowing wouldn't change that much, they put an upper limit into think it's called ''help to buy'' a few years ago and now they sell ugly 2 bedroom factory flats for just under that amount.
Yeah, well if you do things like this they got to help to home owners too, most of them will have an mortage much higher then the new value because of suggested soluttions. And if the government could bail-out banks in 2008 from which said banks learned nothing, they can bail-out mortages too.
Well the very reason of what you just say above is also the reason why no gverment will ever make an decision like this, it will make the house of cards crash and have a gigantic domino effect. Companies like Uber, Deliveroo etc. are all build on millions and millions off debt, purely on the promise off what they could be not on the basis of actual results. That exactly the problem, as any banker could tell you if you come and ask for money for you local bakery shop, but apparently can't if the numbers are high enough. The security of being to big too fail..
I think the financial system is in a bubble currently and the housing prices have surged in that bubble, it's inevitable that the bubble will burst at some point, and it's not going to be pretty i just hope it are the rich who pay for it this time but i'm not very hopefull.