VAT is going up to 20% say government

[RDM]

Silly question but where did this borrowed money come from? Usually I'd say the banks, but it's the banks the government was bailing out

International and institutional investors. If you have a private or company pension it would be likely that at least some of it is invested in Government bonds.

 

[Participant]

Labour would have pumped up fuel duty

Err a rise in VAT will raise the cost of fuel also. They're both as good / bad as each other.

All this will mean is that most people are a few hundred quid worse off each year.

 

[mrochester]

And if you instead change it to say a 10% local income tax you get another problem. Why should someone on £10k a year pay £1000 whilst someone on £1m pays £100,000 when they use similar services? The trouble with the word "fair" is that is usually means "I would pay less".

The issue isn't that someone is paying more or less for the same services, the issue is that a £10K income that turns into £9K after the tax is taken makes a much much bigger difference than £1M to £900K. A person who earns £1M a year needs but a tiny fraction of that to live comfortably, so it's of less concern that you take more from that person in tax. However, the £10K person probably needs every last penny to make a living, so it's important to take as little as possible from them in tax.

 

[LOAM]

Silly question but where did this borrowed money come from? Usually I'd say the banks, but it's the banks the government was bailing out

Part of it is gilt bonds, they sell them for X and promise to buy them back for Y. As they mature they have to sell more of X to pay for Y and so on and so on. All the time the amount owed grows.

 

[Raumarik]

Anyone that finds this surprising clearly isn't very switched on.

A 20% VAT rate is likely to be just ONE of MANY tax rises. We have an unbelievably huge budget deficit that has to be brought under control. I voted for the Conservatives under the *full knowledge* that I would end up paying substantially more tax than I am right now. And this shouldn't be surprising. I'd rather pay a bit more tax for a few years if it means this country doesn't become a third-world country. Just look at Greece if you don't believe what can happen to a country with such money problems.

Of course, in 10 to 15 years when the budget deficit is back to normal levels... I am not expecting the government of the time to lower the VAT to 17.5% again. I totally realise that something like this is, pretty much, going to be a permanent change.

It's not Con-Lib's fault. It's Labour's fault. This is how the political system works in this country. We have a period of time where Labour, the big spenders, spend all the cash reserves we have. Then we have a period of time when Conservatives fix all the problems Labour caused in their previous reign of power.

100% with NathanE - I purposely didnt' vote labour as I was hoping for a different government that would raise taxes, even though I know that I and my heavily pregnant wife, who are moving house shortly and still own our flat will really struggle if taxes do go up. Fact is this mess needs sorted out, quickly or we'll all be worse off in the long run. I'm a public sector worker too so I know fine well my job is on the line these days, but it's a risk worth taking.

 

[Andrew_McP]

I love the suggestion that people are poor because they don't work hard!

Deliberate misinterpretation will not advance the debate.

Working "harder" covers a multitude of things from spending more time educating your children (as common in immigrant communities who tend to know more about real poverty and aspiration) to examining ways of optimising your limited budget. I was not, and did not suggest that low paid workers do not earn their money.

But even they have it better now than they ever have done. And if the rich can afford plasma screens in every toilet, so be it. Better they buy plasmas from Curries than Ferraris from Italy. And they'll buy them off people earning much less, and provide some job security while we're working out how to improve our lot in life.

When I was younger I was much more idealistic. But with time you inevitably start to realise there is always a gap between ideals and harsh reality, especially in a world economy where the average global wage is what will ultimately govern all our standards of living.

We have a long way to fall, even those with TVs in the bog. Enjoy it while it lasts.

Andrew McP

 

[sbi5ar]

a lot of people saying Labour got us into this massive national debt crisis... (which is partly true). However i cant help but feel (and of course this is my opinion) that if the Conservatives of the Liberal Democrats were in power instead of Labour we would be in a much worse situation....

 

[Freefaller]

Anyone that finds this surprising clearly isn't very switched on.

A 20% VAT rate is likely to be just ONE of MANY tax rises. We have an unbelievably huge budget deficit that has to be brought under control. I voted for the Conservatives under the *full knowledge* that I would end up paying substantially more tax than I am right now. And this shouldn't be surprising. I'd rather pay a bit more tax for a few years if it means this country doesn't become a third-world country. Just look at Greece if you don't believe what can happen to a country with such money problems.

Of course, in 10 to 15 years when the budget deficit is back to normal levels... I am not expecting the government of the time to lower the VAT to 17.5% again. I totally realise that something like this is, pretty much, going to be a permanent change.

It's not Con-Lib's fault. It's Labour's fault. This is how the political system works in this country. We have a period of time where Labour, the big spenders, spend all the cash reserves we have. Then we have a period of time when Conservatives fix all the problems Labour caused in their previous reign of power.

Spot on. Though I didn't vote Tory, I agree with this totally. Whilst none of us are happy to pay more tax this is a sensible way of getting more money back to clear the hell that Labour have created.

 

[RDM]

a lot of people saying Labour got us into this massive national debt crisis... (which is partly true). However i cant help but feel (and of course this is my opinion) that if the Conservatives of the Liberal Democrats were in power instead of Labour we would be in a much worse situation....

The Conservatives have had history of being a bit more fiscally conservative (unsuprisingly) so it is unlikely that they would have increased the deficit during the boom years and would have instead went some way to reducing it and maybe even paying off some debt. If they had done that then when the crisis hit we would have had much more of a buffer to fall back on. Of course it would also have meant that there would have been less investment in public services during that time.

It is all immaterial however as we will never know as they were not in power. I do however think that Labour have been irresponsible with the public finances over the last 10 years or so. Gordon Brown seemed to believe his own propoganda about eliminating boom and bust.

 

[aardvark]

Anyone that finds this surprising clearly isn't very switched on.

A 20% VAT rate is likely to be just ONE of MANY tax rises. We have an unbelievably huge budget deficit that has to be brought under control. I voted for the Conservatives under the *full knowledge* that I would end up paying substantially more tax than I am right now. And this shouldn't be surprising. I'd rather pay a bit more tax for a few years if it means this country doesn't become a third-world country. Just look at Greece if you don't believe what can happen to a country with such money problems.

Of course, in 10 to 15 years when the budget deficit is back to normal levels... I am not expecting the government of the time to lower the VAT to 17.5% again. I totally realise that something like this is, pretty much, going to be a permanent change.

It's not Con-Lib's fault. It's Labour's fault. This is how the political system works in this country. We have a period of time where Labour, the big spenders, spend all the cash reserves we have. Then we have a period of time when Conservatives fix all the problems Labour caused in their previous reign of power.

yep.

some people seem to be blind to the damage labour has done - i assume they are just thick.

 

[OzyOly]

yep.

some people seem to be blind to the damage labour has done - i assume they are just thick.

The Thatcher government followed by Major didn't exactly leave the country in a good spot either.

 

[stockhausen]

At the risk of starting a flame fest.

What was wrong with poll tax - we all pay the same for a loaf of bread, we all pay the same for petrol, we all pay the same for electricity. Why shouldn't we all pay the same for policing, rubbish collection etc.

Sure 'rich people' might live in bigger houses but they will only use more services if they have more people under the roof in which case they would have paid more poll tax ?

It was a simple *FAIR* policy unlike council tax which is complicated and unfair. Why should a family of 6 in a small house pay less than an elderly retired couple in a big house when they will use more services ?

What was wrong with the Poll Tax is that it changed from a theoretical model of "From each according to his ability, to each according to his needs!" to one of everyone paying the same, regardless of their wealth.

Council tax is complicated and arguably can even be unfair; that didn't make the Community Charge fair and it certainly wasn't easy to collect - e.g. from students and short-term tenants.

The only tax that gets anywhere near being simple and easy to collect and has the potential to be fair is VAT and God Knows there are enough problems with that. Income tax (which I would agree is essential) is regularly shown to be "evaded" by higher earners

 

[aardvark]

The Thatcher government followed by Major didn't exactly leave the country in a good spot either.

clearly you don't remember how labour bankrupted us in the 70's with the power blackouts, strikes, you had to go on the black market to buy candles ffs!! thatcher improved things in the 80's and now we have to do the same thing again - make no mistake, all the pain you have to bear in the next ten years is down to labour.

 

[stockhausen]

The Conservatives have had history of being a bit more fiscally conservative ...

Thatcher managed to make a pretty good job of frittering away the North Sea oil income, embarked on a wholesale campaign of flogging off anything that wasn't nailed to the floor and encouraged a selfish greedy goal of instant riches.

Blair and New Labour just took their led from her and maintained the illusion that everybody could get rich quick without giving anything back to society

 

[OzyOly]

clearly you don't remember how labour bankrupted us in the 70's with the power blackouts, strikes, you had to go on the black market to buy candles ffs!! thatcher improved things in the 80's and now we have to do the same thing again - make no mistake, all the pain you have to bear in the next ten years is down to labour.

Yeah, that's getting a little bit before my time.

 

[Andy_82]

clearly you don't remember how labour bankrupted us in the 70's with the power blackouts, strikes, you had to go on the black market to buy candles ffs!! thatcher improved things in the 80's and now we have to do the same thing again - make no mistake, all the pain you have to bear in the next ten years is down to labour.

The three day week, strikes etc were under Heath's government not Labour. The Conservatives aint perfect either, remember the ERM debarcle

 

[krooton]

Err a rise in VAT will raise the cost of fuel also. They're both as good / bad as each other.

All this will mean is that most people are a few hundred quid worse off each year.

The thing is, if more people actually put any effort in to spending money wisely, saving, using discounts and deals, that few hundred quid actually wouldn't impact their current quality of life.

Far too many people needlessly pay more than they need to for things because they lack the bargain hunting initiative.

Plus, I have no sympathy for smokers complaining about the price of smokes. You choose to do, you pays the price, it certainly isn't an essential item, so if you are short on cash, kick the habit dawg!

 

[arknor]

And if you instead change it to say a 10% local income tax you get another problem. Why should someone on £10k a year pay £1000 whilst someone on £1m pays £100,000 when they use similar services? The trouble with the word "fair" is that is usually means "I would pay less".

exactly 10% of 10k is massive if your expected to live of it compared to 10% of 1mil which the guy probably wont even notice hes getting a few pounds less intrest

 

[Cosimo]

Thatcher managed to make a pretty good job of frittering away the North Sea oil income, embarked on a wholesale campaign of flogging off anything that wasn't nailed to the floor and encouraged a selfish greedy goal of instant riches.

Gordo and Blair frittered away the national wealth......blah blah blah..... water under the bridge....blah blah blah......

 

[Dolph]

Labour were going to raise vat and NI... we've got one of those cancelled and the promise of fairer taxation bands. Win.