 BUSINESS 4NETWORKING [VAT up to 18.5% in 2011?] |
| Author: |
Post: |
|
|
Posted on 26th Nov 2008 at 07:14
David Cameron has accused Labour of secretly planning to raise taxes after the next general election after it emerged that the Treasury had considered increasing VAT.
A document mistakenly published on the internet stated that the tax would rise to 18.5% in 2011 to help pay for a 13-month reduction from 17.5% to 15% starting on December 1.
The Treasury said the draft background note was drawn up last week ahead of Monday's pre-Budget report but should never have seen the light of day.
Chancellor Alistair Darling considered the proposal but rejected it, said a spokesman, who insisted there were no current plans for an increase in VAT rates.
But Conservatives claimed the paper was proof that Labour was planning to increase taxes following the election expected in 2010 - and that it would cost every household in the UK an extra £200 on average.
The row blew up ahead of a debate in the House of Commons later on the dramatic measures announced on Monday.
They included a £20bn fiscal stimulus to restore growth, a new 45% top rate of income tax for high earners and a 0.5% increase in National Insurance in 2011.
The Tories claimed that there was a £10 billion "black hole" in the Government's finances for 2011-12 set out in the PBR.
Treasury minister Angela Eagle dismissed his claim as "scaremongering".
"It is a pure administrative error on the part of HM Revenue and Customs," she said.
But Liberal Democrat Treasury spokesman Vince Cable said: "The Government has been at best incompetent and at worst highly duplicitous.
"At a time of economic emergency we need a clear-headed Government with a sound economic strategy, instead we are seeing tax policy being made up on the hoof."
|
   |
|
|
Posted on 26th Nov 2008 at 08:51
I think any tax assumptions for 3 years time should be regarded as just that. The actual tax rates across the board will only be possible to calculate when we see how the economy performs over those 3 years. If the economy roars back into life, the tax take will climb and the need for big increases moderate a little.
However, this much we do know:
1. The current tax giveaway is much smaller than the Chancellor claims.
2. The debt is also being driven by ineffecient and growing public spend. In the statement, for example, a new body was set up to monitor (and probably influence) bank lending. This is a wonderfully typical government way of coming up with an expensive solution to the problem.
3. To restore the level of debt to where it was, say 3 years ago, will need, according to current analysis, an 8% increase in the basic rate of income tax. Now, again, that number is too early to predict, but it does lend scale to the problem of the money the government borrows.
I believe we have mortgaged our future too much. A years serious belt tightening, with focused help at the poorest and most vulnerable, and some real understanding of the needs of small businesses, would have resulted in less long term pain.
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 26th Nov 2008 at 10:47
I feel generally with what the government are looking on doing we are likely to have higher tax rates in a few years when things have settled down. It does also depend on what industry the UK government can attract into UK, I feel there is alot of different industries that we need to attract. But thats only my 2 cents on the subject! Im no economist!
www.comptroub.com
www.ctsdorset.co.uk
www.ctsdorset.com
|
| |
|
|
Posted on 26th Nov 2008 at 15:29
I predict that 15% will stay forever, and even some of the essentials may be upgraded to that bracket.
I then predict a new bracket of 20 or 21% for 'luxury' goods - e.g. cars, TVs etc..
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
Bookkeeping
Management Accounts
Project Accounts
Call us: 01993 771100
Want a fully online bookkeeping system – check out our 60 day free trial
|
| |
|
|
Posted on 26th Nov 2008 at 16:04
It will be difficult enough as it is to raise the rate back to 17.5%. No chancellor who wants to keep his job would dare to take it further than that.
January 4N Member Offers:
"DB&B for the price of B&B" or "Dinner for 2 with Free Wine" Click here for details
A Hotel for Business or Pleasure (but better for BOTH!)
01404 831278
|
| |
|
|
Posted on 26th Nov 2008 at 16:40
The multiple rates thingy is a good idea because it makes the tax system more complex,more expensive to comply with and more expensive to police.
I think the government will go for that. I wish you hadnt suggested it Graham!!!
Now...if we reduced the number of different types of tax, simplified the whole system, massively reducted the bureaucratic effort of administering it, the net Treasury take would increase.
And the cost of compliance would reduce. Meaning we could afford slightly more tax to reduce the debt.
When we get through this present situation, is this worth a thought!?
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 26th Nov 2008 at 17:04
The flat rate scheme idea had been gaining some momentum as an alternative - I can't see it happening because:
1) do you tax income or expenditure
2) if you can wriggle out of a simple scheme, your whole tax asset to the government can disappear (i.e. a single loophole could be crippling to the economy)
3) one of the benefits of a complex system is that you can target niches to support at any one time
btw I absolutely do not, and never intend to do tax advice/planning so this isn't because I like it or want it
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
Bookkeeping
Management Accounts
Project Accounts
Call us: 01993 771100
Want a fully online bookkeeping system – check out our 60 day free trial
|
| |
|
|
Posted on 26th Nov 2008 at 17:09
I agree with the niche targeting bit, but it is an expensive luxury. I think that the complex system is still very capable of being wriggled out of.
For the very wealthy, it is not particularly hard to put most of your resources beyond tax. And it is certainly worth it!
I think that simplicity at the level of a flat rate scheme is, as you suggest Graham, probably just not achievable. But I always worry when additionaly complexities are introduced, which increase the cost of collection.
For example, the tax on travel, known as the passport fee, must fail to yield the cost of interviewing new applicants?
Did Insurance premium tax add to the cost of collection?
I dont know the answers to those by the way, but I do wonder.
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 26th Nov 2008 at 17:19
Quote:
For example, the tax on travel, known as the passport fee, must fail to yield the cost of interviewing new applicants?
My wife applied for her first passport some months back. She attended the interview in the nicely refurbished 5,000 sq ft prime-site offices in the centre of Exeter. One receptionist and 2 interviewers were on duty. We came, registered, did interview and left without seeing another applicant.
Funny thing was, she even got a question wrong and still "passed" the Mickey Mouse process.
January 4N Member Offers:
"DB&B for the price of B&B" or "Dinner for 2 with Free Wine" Click here for details
A Hotel for Business or Pleasure (but better for BOTH!)
01404 831278
|
| |
|
|
Posted on 26th Nov 2008 at 20:35
My daughter went to a curiously similar monument to opulence in Newcastle. She failed to answer a number of the questions, like when is your Dad's birthday(!!!) and still got the passport.
All fantastic value for money, we felt!!!!!!!!!!!
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |