Direct & Indirect Taxation

Ive just witnessed an argument in the lounge based upon V.A.T. (Purchase Tax in USA)....

This got me to thinking...

I would be totally in favour of getting rid of most Excise Duties, in favour of higher Income Tax levels.

I dont mean on Luxury Goods like Gold (Currently zero rated for VAT for some reason)...but i dont, personaly, like the idea of children paying 17.5% of their pocket money in tax when they buy sweets (purely as an example).

While having some good points; for example high taxes on petrol (gas) make you consider driving less, and having smaller and more efficient cars. I think that, on the whole, VAT and its equivalents are just a means of getting money for the Treasuries without alerting the citizens to the true amount of taxation. They are also expensive to administer (not for the government, but for business VAT is a nightmare) and therefore drive up costs and Red Tape.

Its also not a very "progressive" tax, as everyone irrespective of income pays the same tax.

I prefer an upfront approach...let me pay the tax at source, and the rest of the money is mine. Make excise taxes the exception rather than the rule...

I mean, its not as if we even make money off the tourists with it...they can claim all their VAT back as they leave the country ;)

I think the recent announcement of the merger of the Inland Revenue with Customs & Excise is a perfect opportunity...

Now i'll go to bed, before J'Pol jumps all over me :)

whatever one calls it at the end of the day the money raised ends up in the coffers of government. Stealth taxes are just a way of making people feel they are being taxed less. In the UK the price you see on the shelf is the price including purchase tax (VAT) and therefore the thought of the tax rarely springs to mind. Here in the USA the tax is not shown, supposedly so we can see the base price (it's more the stores trying to make the price look cheaper). The purchase tax is added at the checkout (till, cash register) unless you are in a state that doesn't have purchase tax.
i don't like being charged for the honour (note i used a "u") of buying something but that's the way the various states raise revenue above state tax and federal tax.
With purchase tax i do have the choice not to buy and therefore not pay tax, however the extra income tax that i would be required to pay to make up for the shortfall would probably depress me more than the present system.

Quote:

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Originally posted by vidcc@2 April 2004 - 23:02
whatever one calls it at the end of the day the money raised ends up in the coffers of government. Stealth taxes are just a way of making people feel they are being taxed less. In the UK the price you see on the shelf is the price including purchase tax (VAT) and therefore the thought of the tax rarely springs to mind. Here in the USA the tax is not shown, supposedly so we can see the base price (it's more the stores trying to make the price look cheaper). The purchase tax is added at the checkout (till, cash register) unless you are in a state that doesn't have purchase tax.
i don't like being charged for the honour (note i used a "u") of buying something but that's the way the various states raise revenue above state tax and federal tax.
With purchase tax i do have the choice not to buy and therefore not pay tax, however the extra income tax that i would be required to pay to make up for the shortfall would probably depress me more than the present system.

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vid, I like the tax system in the US the way it is.

I pay the tax when I buy the goods. I also like seeing the price before tax.

Let me tell you how it will be
ThereÕs one for you, nin'teen for me

Cause I'm the tax man
Yea I'm the tax man

Should five percent appear too small
Be thankful I don't take it all

Cause I'm the tax man
Yea I'm the tax man

If you drive a car-car I'll tax the street
If you try to sit-sit I'll tax your seat
If you get too cold I'll tax the heat
If you take a walk I'll tax your feet
Tax man

Well I'm the tax man
Yea I'm the tax man

Don't ask me what I want it for
If you don't want to pay some more

Cause I'm the tax man
Yea I'm the tax man

Now my advice for those who die (tax man)
Declare the pennies on your eyes (tax man)

Cause I'm the tax man
Yea I'm the tax man

And you're working for no one but me
(Tax man)

Quote:

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Originally posted by Busyman@2 April 2004 - 19:52
vid, I like the tax system in the US the way it is.

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is this the same busyman that thinks our taxes are spent badly? :lol: :lol:

I believe we get off lightly compared to other countries when it comes to taxation but then we lose out because we have to pay for other things ourselves in the costly private sector.
i am interested as to why you prefer to see the pre tax price for goods. We can't avoid paying the tax and we seldom see the post tax price on display (they could do both) the end result is that if something is shown as a dollar you have to pay $1.06 (depending on the rate where you are)...as i said in my previous post it keeps the fact that we are paying tax in our minds but apart from that it serves no reason (perhaps it keeps our mental arithmatic up to speed :lol: )

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Originally posted by vidcc+3 April 2004 - 01:40--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (vidcc @ 3 April 2004 - 01:40)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-Busyman@2 April 2004 - 19:52
vid, I like the tax system in the US the way it is.

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is this the same busyman that thinks our taxes are spent badly? :lol: :lol:

I believe we get off lightly compared to other countries when it comes to taxation but then we lose out because we have to pay for other things ourselves in the costly private sector.
i am interested as to why you prefer to see the pre tax price for goods. We can&#39;t avoid paying the tax and we seldom see the post tax price on display (they could do both) the end result is that if something is shown as a dollar you have to pay &#036;1.06 (depending on the rate where you are)...as i said in my previous post it keeps the fact that we are paying tax in our minds but apart from that it serves no reason (perhaps it keeps our mental arithmatic up to speed :lol: ) [/b][/quote]
Well I still think the government misappropriates our tax money.

I was talking about taxes in reference to the topic. ;)

Also if the pretax price had to be disclosed with the purchase price as one, then retailers will "round up" to the nearest 10 cents.

For marketing purposes no one wants to advertise, "&#036;1.06". <_<

VAT is Value Added Tax. The concept is that you have a degree of control.

So if you buy a TV at £100 you pay £17.50

If you buy a TV at £200 you pay £35.

In that way, people who can afford to buy more expensive items, pay more tax. Or indeed if you want to pay less tax, you can do so.

There is no VAT on certain items, which are thought to be essentials. So groceries, children&#39;s clothing things like that have no VAT on them. Non-essential thing like sweets do have VAT on them. For adult clothing there is VAT, however again the more you can afford (or choose) to pay, the higher the tax you pay.

As stated, the concept is that you have a degree of control.

Excise duties are indeed another form of revenue raising. However as I have stated elsewhere the idea is that they are also used to address things like health and environmental issues. VAT takes no cognizance of this. It is simply a tax. There are various rates of Excise duty and they vary much more often than VAT. In the last 30 years the VAT rates have only changed 3 times (as I recall).

So Excise duties can vary from item to item- diesel / petrol / gas being obvious examples. So if the Government feels that people should move to gas cars they can impose a lower rate of Excise duty on Gas and a higher one on Petrol. In that way the gas is about half the price of petrol and people convert their cars. That has a positive effect on the environment.

Similarly we have high duty on cigarettes, to try to encourage people to stop smoking. If you look at the proportion of smokers in the UK, compared to previous years, the numbers are dropping. I believe that cost has been a factor.

It really is not as simple as, it&#39;s all tax.

From a business point of view taxes in the U.S. are completely out of control. That is in fact the primary reason why unemployment is skyrocketing in the U.S. because big buisnesses are closing down factories, laying off workers, etc. so that they can move their ventures offshore where they pay little or no tax at all.

The more you make the more they take. Should it not all be equal? Why should a blue-collar worker be taxed any less than a white-collar executive? I use the term blue and white because quite frankly in the U.S. the income brackets are pretty much classified as such.

Would someone like to enlighten me in regard to that? :)



http://community.the-underdogs.org/s...appy/tails.gif

It was nice to see the Beatles get a mention. :D


The last line is essentialy correct. The rate of taxation simply determines how quickly the money passes through the governments hands.

If you earn £100 and pay 25% to the taxman you have £75 left. You spend that £75 on a product and the seller makes a profit on which he is taxed (and so on). This is known as the multiplier and the quicker the circuit of money the more the government can influence and act in the economy.

What governments don&#39;t like are leakages to the system - that is, money put in a sock under a bed or money leaving the country. Unless they introduce an under-the-bed-tax there is little than can be done regarding the former, the latter has a number of options although the most effective is to simply attract in as much if not more than you lose. Serious balance deficits such as the current US one have little impact in the short term but will ultimately, if allowed to continue, result in higher interest rates and a slower economy.

Taxation has a number of uses, not least ensuring the less fortunate have some protection. Remember though that such transfer payments ae not leakages. These individuals use this money to buy goods with which the seller makes a profit and is taxed and the money once again returns to the government.

Apologies for over-simplifying the above process but I thought I would try to demonstrate that any system that removes a percentage of earnings makes the last line of the Beatles song relevant to everyone.

Quote:

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Originally posted by Biggles@3 April 2004 - 12:01
It was nice to see the Beatles get a mention. :D


The last line is essentialy correct. The rate of taxation simply determines how quickly the money passes through the governments hands.

If you earn £100 and pay 25% to the taxman you have £75 left. You spend that £75 on a product and the seller makes a profit on which he is taxed (and so on). This is known as the multiplier and the quicker the circuit of money the more the government can influence and act in the economy.

What governments don&#39;t like are leakages to the system - that is, money put in a sock under a bed or money leaving the country. Unless they introduce an under-the-bed-tax there is little than can be done regarding the former, the latter has a number of options although the most effective is to simply attract in as much if not more than you lose. Serious balance deficits such as the current US one have little impact in the short term but will ultimately, if allowed to continue, result in higher interest rates and a slower economy.

Taxation has a number of uses, not least ensuring the less fortunate have some protection. Remember though that such transfer payments ae not leakages. These individuals use this money to buy goods with which the seller makes a profit and is taxed and the money once again returns to the government.

Apologies for over-simplifying the above process but I thought I would try to demonstrate that any system that removes a percentage of earnings makes the last line of the Beatles song relevant to everyone.

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It&#39;s a circle of tax thing.

Hakuna The Taxman