VAT coming to apps and digital downloads :(

scorza said:
Firstly do you accept the following definition of a regressive tax?

"a tax that takes a larger percentage from low-income people than from high-income people."
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Sure.
I've already conceeded that the highest incomes probably get hit less
Those with highest income in the country will be hit by VAT less hard you are right
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I just don't agree that the poor are hit hardest
 
most of my digital downloads are games ie: from steam, I think they are already taxed If I am correct?
 
Judgeneo said:
That is most certainly up for debate. I disagree that VAT is regressive.
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Because VAT is charged on almost everything, including utility bills and a lot of food products low earners pay a greater % of their wage as VAT than rich people as they need to spend nearly all of their wage.
 
I had always assumed that VAT was charged already. Makes sense that it should be, and will be. Nobody likes price increases but you can't always avoid them.
Now, lets put VAT back to 17.5% or less.
 
Glaucus said:
If anything it's like to stay at 69p, they're priced at certain levels for a reason. Same reason things are priced at 99p rather than at whole pounds, psychologically we think its cheaper. They can already charge what they want. So the chance of it stepping up like that is slim. It's not like other markets with competition. Each ecosystem is a monopoly as they aren't cross platform capable.
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Actually (and this maybe a myth) but the 99p rather than £1 thing is an old theft prevention measure and not psychological at all. In the olden days, when everyone paid with cash, shops would find charging in whole pounds made staff theft that bit easier as you charge a pound, get given the gold coin then accidentally-on-purpose forget to put it in the till.

However by making it 99p it becomes necessary to open the till (to give the 1p change) which in turn meant putting it through the till.

Why we still have it now though I don't know.
 
malfunkshun said:
I had always assumed that VAT was charged already. Makes sense that it should be, and will be. Nobody likes price increases but you can't always avoid them.
Now, lets put VAT back to 17.5% or less.
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Personally I think VAT should be progressive. 0% on things like food (which to be fair is the case now), then 10% on things like clothing and rising higher and higher depending on the 'luxury' value of the good. Wanna buy a Bugatti Veyron? VAT is 40%, want a 1 litre Kia however and it should be 10%
 
by doing this, the companies themselves won't be paying any more tax to the HMRC than they already are, they'll pass the cost on to the consumer, the company will still make its profit, and the government will claim that they've gotten these companies to fall into line. In reality, they're just making us pay more, and the companies carry on regardless.. a bit like this post.
 
areksnumbr1sxylady said:
I think 75% VAT would be a smarter move.
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I'd kinda agree with you there...

Something like no VAT on essentials (fresh/unprocessed foods, fuel, some services) then 100% VAT on everything else. The carrot would be no tax on income.

The government don't take anything from you working but anything you buy that isn't an essential will give the government income. A tax on consumption rather than working.
 
Tunney said:
Sorry, let me clarify: very little is being achieved in stopping the richest in society from exploiting tax loopholes.

Closing this particular loophole will no doubt raise quite a bit of money. Enough to reverse the cuts to legal aid, for example. However, it's going to hit those at the bottom the hardest as a proportion of their income.
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Yep because those on minimum incomes will really struggle now they have to pay an extra few pence on their apps for their iPhones... After all smartphone and other electronic apps are essentials...
 
scorza said:
Firstly do you accept the following definition of a regressive tax?

"a tax that takes a larger percentage from low-income people than from high-income people."
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As it's a flat tax on (mostly) non essentials how does it take a larger percentage from low income people? Significantly more money (proportional to income) will be spent on essentials (generally no vat) by the poor than the rich considering the rich will spend more money on luxuries (and thus will have to pay full rate VAT on a greater proportion of their purchases)...

If 80% of your income is spent on essentials then the 20% of your spending on luxuries is going to give you a much lower proportion than the rich person spending only 30% on essentials and 70% on luxuries.


For the example above the low income earner would pay 4% VAT on all their spending whereas the "rich" person would pay 14% of their spending in VAT.
 
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Energize said:
That's the thing, it isn't. Virtually every essential has VAT on it.
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Food (non junk)?
Fuel? (5%)
Not sure about housing though.

The point being the rich will still pay more proportionally as they will buy the same as the poor but spend more on full rate goods.
 
Amp34 said:
Food (non junk)?
Fuel? (5%)
Not sure about housing though.

The point being the rich will still pay more proportionally as they will buy the same as the poor but spend more on full rate goods.
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Fresh food like smoothies etc have full rate VAT on it, half the food on my shopping bill does.

Fuel has full rate VAT on it, if you are referring to gas and electric, then 5% is still 5%.

Clothes are full rate, appliances are full rate.
 
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