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.

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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)

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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.

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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

:lol:

Pumba aka Gordon would no doubt agree.

"Progressive taxes soak the rich, and Regressive taxes soak the poor."

An example...

Let&#39;s imagine two frugal traveling salesmen. They each have to buy a new car every four years to (say) keep up appearances, and they need reliable transportation.

(One guy makes 15K, the other 100K)

Run the numbers on a the RATE of total income each pays on on a 17.5%% sales tax.... eg VAT

Poor Boy buys a £10,000 car pays £1750 or well over 10.0% of his income.
Rich Boy buys a £60,000 car pays £4250 or less than 5.0% of his income.

Poor Boy has nearly 3 times the tax bite, or rate of tax on a car. Rich Boy hardly feels the taxes.

Then run the numbers on a £30 pair of Levis, and the tax rate discrepancy rockets.

Sales tax (or VAT) is NOT a flat tax.


Let us look again at what happens when people actually THINK about regressive taxation...

Remember when Ms Thatcher brought in the Poll Tax? The ultimate Regressive Tax...there were riots.

The only difference is that you can choose not to buy the goods with VAT in theory... with the Poll Tax you had to pay.

However lets take another example...Tampons. Why should poor ladies pay a much higher proportion of their income in VAT for this "luxury"? Are you suggesting they should use rags to avoid it?

Should poor men have beards? Clothes aren&#39;t a necessity?

The fact is, if the poor didnt require the things for sale, there would be much fewer Rich people around, so let again I say....... increase Basic Income Tax rates, and get rid of most VAT.

BTW....just out of curiosity, does anyone know why Gold is zero rated for VAT? I would have thought Gold was a luxury, if anything is ;)



As an aside, the Government couldnt give 2 hoots whether you smoke. They tax cigarettes so much as there are a large group adicted to the habit and will pay it...the amount they pay is hugely more than what they cost the NHS, they are in fact subsidising the rest of us.

They are encouraging Organised Crime with this policy, as we all know...just about everyone knows where they can get cigarettes at 2/3 the shop price....

Motorists are also subsidising the rest of us, paying a hugely inflated amount of Tax. Shame that Orgainsed Crime cant handle petrol as easily as Cigarettes...there is a huge market waiting <_<

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Originally posted by Rat Faced@3 April 2004 - 10:33
"Progressive taxes soak the rich, and Regressive taxes soak the poor."

An example...

Let&#39;s imagine two frugal traveling salesmen. They each have to buy a new car every four years to (say) keep up appearances, and they need reliable transportation.

(One guy makes 15K, the other 100K)

Run the numbers on a the RATE of total income each pays on on a 17.5%% sales tax.... eg VAT

Poor Boy buys a £10,000 car pays £1750 or well over 10.0% of his income.
Rich Boy buys a £60,000 car pays £4250 or less than 5.0% of his income.

Poor Boy has nearly 3 times the tax bite, or rate of tax on a car. Rich Boy hardly feels the taxes.

Then run the numbers on a £30 pair of Levis, and the tax rate discrepancy rockets.

Sales tax (or VAT) is NOT a flat tax.


Let us look again at what happens when people actually THINK about regressive taxation...

Remember when Ms Thatcher brought in the Poll Tax? The ultimate Regressive Tax...there were riots.

The only difference is that you can choose not to buy the goods with VAT in theory... with the Poll Tax you had to pay.

However lets take another example...Tampons. Why should poor ladies pay a much higher proportion of their income in VAT for this "luxury"? Are you suggesting they should use rags to avoid it?

Should poor men have beards? Clothes aren&#39;t a necessity?

The fact is, if the poor didnt require the things for sale, there would be much fewer Rich people around, so let again I say....... increase Basic Income Tax rates, and get rid of most VAT.

BTW....just out of curiosity, does anyone know why Gold is zero rated for VAT? I would have thought Gold was a luxury, if anything is ;)



As an aside, the Government couldnt give 2 hoots whether you smoke. They tax cigarettes so much as there are a large group adicted to the habit and will pay it...the amount they pay is hugely more than what they cost the NHS, they are in fact subsidising the rest of us.

They are encouraging Organised Crime with this policy, as we all know...just about everyone knows where they can get cigarettes at 2/3 the shop price....

Motorists are also subsidising the rest of us, paying a hugely inflated amount of Tax. Shame that Orgainsed Crime cant handle petrol as easily as Cigarettes...there is a huge market waiting <_<

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One thing that is left out of your description is

What is the income tax rate and how much would you want an increase?

Another factor that I should have mentioned above is credit.

Every good purchased on credit is a profit to someone. This profit is taxed consequently the government is taxing on goods sold which we haven&#39;t actually earned the money to pay for yet. This is why if one were to wait for government regulations to curb indebtedness one could turn a little blue around the gills.

I&#39;m in agreement with RatFaced, take it from me up-front and the rest is mine.

I&#39;d also be in favour a local income tax to replace council tax. last year my council tax rose by about 17%, this year it was only 7% ..... :helpsmile:

Tax me more.

I&#39;m Canadian, and I like it.

:ninja:

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Originally posted by Biggles+3 April 2004 - 11:01--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Biggles @ 3 April 2004 - 11:01)</td></tr><tr><td id='QUOTE'> Unless they introduce an under-the-bed-tax [/b]

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I hope Gordon Brown doesn&#39;t read that, you&#39;ll give him ideas.
Oops, too late, there goes my pension.

<!--QuoteBegin-Rat Faced
BTW....just out of curiosity, does anyone know why Gold is zero rated for VAT?[/quote]I don&#39;t know where you get that idea. Gold is rated at 17.5%. There have been several scams aimed at avoiding VAT on gold, there wouldn&#39;t be much point if it was zero rated.

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Remember when Ms Thatcher brought in the Poll Tax? The ultimate Regressive Tax...there were riots.

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Agreed, it was badly implemented, but it wasn&#39;t as bad as was made out at the time, and no-one gave it a chance to find out what changes could be made.

Were you aware for instance that those on benefits were given extra money to cover the payments, in cash. The amount was based on the highest charging councils, so those who lived in lower charging areas actually made money on the deal. Unfortunately, those living in the higher charging areas wanted to keep this cash too, so they kept it and didn&#39;t pay the tax. When demands were made that they pay the money they had already received, they rioted. That put&#39;s a whole new slant on the situation, don&#39;t you think?

No doubt you think it is ok that someone living alone should pay 75% of the tax of his/her neighbours where there are 2 or more incomes. The only cost to councils which is almost directly proportional to the number of dwellings is rubbish collection, almost everything is proportional to the number of occupiers. Hardly what I would call progressive taxation.

I prefer the VAT type system.

It gives me control over the tax I pay, by choosing what to buy and how expensive a version of it.

With PAYE and the like you have no control.

Oh and I would have thought that for most traveling salesmen the vehicle would be purchased by the Company.

Oh and businesses can reclaim VAT on purchases of goods and services, it&#39;s called input tax.

Oh and VAT registered businesses are the only ones who don&#39;t pay VAT, they claim it all back from the Government.

Oh and VAT rates vary depending on the type of Gold it is, whether bullion, coin, investment. It can actually get rather complex.

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Originally posted by MagicNakor@5 April 2004 - 05:05
Tax me more.

I&#39;m Canadian, and I like it.

:ninja:

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classic :lol:

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Originally posted by MagicNakor@5 April 2004 - 02:05
Tax me more.

I&#39;m Canadian, and I like it.

:ninja:

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learn from the master...

get cash for your pay, no cheques...

that&#39;s what i request from my students... :lol: you dont pay a cent in tax <_<

and stash all ur &#036;&#036;&#036; under ur bed :ph34r:

fuck the banks you dont need &#39;em

Heh. I&#39;m not employed right now. Doesn&#39;t stop the government from taxing me. Fair PharmaCare. Right.

If you&#39;re working for a company, you won&#39;t get cash. But you will get CIT, CPP, EI, and union dues taken off your cheque, usually amounting to 25-30% of the net pay. This doesn&#39;t take into consideration the federal and provincial taxable income. ;)

Of course, if you buy anything, you get another 14.5% tax added on.

:ninja:

I went to Canada once, Niagra Falls. Must be why I had to pay around &#036;6 U.S. for a Big Mac, with cheese even. :angry: :P

I personally think that direct taxation is fairer, because it depends on a person&#39;s income, whereas indirect doesn&#39;t.

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Originally posted by MagicNakor@5 April 2004 - 21:46
Heh. I&#39;m not employed right now. Doesn&#39;t stop the government from taxing me. Fair PharmaCare. Right.

If you&#39;re working for a company, you won&#39;t get cash. But you will get CIT, CPP, EI, and union dues taken off your cheque, usually amounting to 25-30% of the net pay. This doesn&#39;t take into consideration the federal and provincial taxable income. ;)

Of course, if you buy anything, you get another 14.5% tax added on.

:ninja:

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well i do get paid with checks in the institution i am working now and i am paying tax on that but I demand cash on all of my private students who want lessons.... :P

fuck tax :lol:

i mean, seriously, who needs credit and tax when u pay everything with cash :P

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Originally posted by james_bond_rulez+6 April 2004 - 16:54--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (james_bond_rulez @ 6 April 2004 - 16:54)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-MagicNakor@5 April 2004 - 21:46
Heh. I&#39;m not employed right now. Doesn&#39;t stop the government from taxing me. Fair PharmaCare. Right.

If you&#39;re working for a company, you won&#39;t get cash. But you will get CIT, CPP, EI, and union dues taken off your cheque, usually amounting to 25-30% of the net pay. This&nbsp; doesn&#39;t take into consideration the federal and provincial taxable income. ;)

Of course, if you buy anything, you get another 14.5% tax added on.

:ninja:

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well i do get paid with checks in the institution i am working now and i am paying tax on that but I demand cash on all of my private students who want lessons.... :P

fuck tax :lol:

i mean, seriously, who needs credit and tax when u pay everything with cash :P [/b][/quote]
I dob&#39;t know where you live.

However unless you intend buying your house, car etc cash then I suggest you get yourself a credit rating.

Banks and Building Societies do not like invisible people turning up and asking for large sums of money.

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Originally posted by J&#39;Pol+6 April 2004 - 13:18--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (J&#39;Pol &#064; 6 April 2004 - 13:18)</td></tr><tr><td id='QUOTE'>

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Originally posted by james_bond_rulez@6 April 2004 - 16:54
<!--QuoteBegin-MagicNakor

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@5 April 2004 - 21:46
Heh. I&#39;m not employed right now. Doesn&#39;t stop the government from taxing me. Fair PharmaCare. Right.

If you&#39;re working for a company, you won&#39;t get cash. But you will get CIT, CPP, EI, and union dues taken off your cheque, usually amounting to 25-30% of the net pay. This&nbsp; doesn&#39;t take into consideration the federal and provincial taxable income. ;)

Of course, if you buy anything, you get another 14.5% tax added on.

:ninja:

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well i do get paid with checks in the institution i am working now and i am paying tax on that but I demand cash on all of my private students who want lessons.... :P

fuck tax :lol:

i mean, seriously, who needs credit and tax when u pay everything with cash :P

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I dob&#39;t know where you live.

However unless you intend buying your house, car etc cash then I suggest you get yourself a credit rating.

Banks and Building Societies do not like invisible people turning up and asking for large sums of money.[/b][/quote]
True.



Most of the people that I hear say "fu*k tax, pay with cash" already have screwed up credit. :lol: