Daily View: VAT rate rise
Ìý
Commentators discuss the VAT rate increase.
The that the VAT rise hits the poorest hardest:
"The chancellor claims that this week's rise is relatively fair. Fairness is a slippery term; but if a fiscal measure hits the vulnerable more than the well-off, it is clear that such a change is regressive. The IFS has calculated that the rise will cost the poorest 10th of society over 2% of their income, while taking less than 1% from the richest 10th. If that sounds unprogressive to you then you are in good company: both Mr Cameron and Nick Clegg described VAT as regressive before the election. Mr Osborne wants to portray his regressive tax measures and spending cuts as a matter of necessity."
[subscription required] that the calculations on how much the extra VAT will affect families doesn't take into account the possibility that families may decide to change their spending habits:
"Essentials such as food, children's clothing and books are VAT zero-rated, so they won't be included. We could just shop less and work out what we need. It's not about buying up the services of some declutter life coach or emulating Gandhi and throwing out your favourite possessions, just realising that you don't require another pair of jeans and remembering that shopping is not meant to be a hobby and mall-walking should not count as exercise."
that the accusation that the rise in VAT will bring the economy to a halt should be taken with a huge pinch of salt:
"[T]the good news is that the rise is being made in the face of a resurgent British economy that is better able to absorb it now than would have been the case 12 months ago... Moreover, against rising VAT must be placed the realisation that anyone with a mortgage is benefiting from historically low interest rates. This has produced a large boost to the budgets of the majority of households which far outweighs tax rises."
that the VAT rise uncovers a political truth - that it is easier to raise £13bn from the poor:
"The truth is that Osborne and Cameron have proved too vulnerable to big-spending lobbyists of both right and left, and that is why VAT must pay the price. They were too scared of the unions to imitate Ireland and elsewhere with a flat-rate cut in public sector pay. Like the unions, they prefer redundancies. This is despite public-sector pay rising by 3.6% in Labour's last year, while private pay fell by 1.9%.
nbsp;
"Ministers were likewise putty in the hands of railway contractors, wind turbine makers, computer salesmen and those latter-day terrorists of the security industry, which howls death and destruction at the merest whisper of a cut. They were even scared by the London museum lobby. The Stratford Olympics site should become a theme park of aircraft carriers, high-speed trains, NHS computers and Helmand blast walls, memorials to Britain's multibillion-pound prestige spree at the start of the 21st century."
The the VAT rise shows a decline in the standard of politicians' lies:
"[W]orst of all is now it's been established that it doesn't matter at all what a party says at the election, as it's a matter of honour to do the opposite as soon as you're elected. So all that debating is a pointless exercise in which nothing can be achieved, so it might as well be treated like the last day at a school and Dimbleby should say, 'With me tonight are the three party leaders, who have all been allowed to bring in games.'"
that the VAT rise may not be damaging to the coalition:
"If the new VAT rise just becomes a fact of life then the coalition will pay a low political price for the rise. Indeed, if the VAT rise ends up helping provide money for an income tax cut later in the parliament then the coalition could actually benefit from it."
Links in full
•
•
•
•
•
•
