The most obscene tax in Britain (and Europe)

It’s time to do the quarterly VAT return.

I know this is hardly an original thought but…

Fuck me slowly with a sweet potato while floating in a tub of battery acid…

Is VAT not just the most appallingly obscene tax ever thought up by any Euro-wanker in the entire history of Euro-wanking?

It’s a tax on behalf of the rich and against the poor.

All big companies and sensible people with loads of money are registered for VAT and ultimately don’t pay it. People on lower incomes and people struggling to make ends meet – single parents, the unemployed, the disabled, the retired, pensioners – are forced to pay it.

What sort of tax is that?

It’s a tax which very large companies do not pay and which the unemployed do pay. It’s a tax which specifically targets those least able to pay it.

For those registered, VAT is a tax where the money just goes round in a circle and the government does not benefit at the end of the process; it just keeps loads of bureaucrats in pointless work.

In a simplified but basically true break-down…

Company A adds 20% VAT on top of the price they really want to charge and then bills Company B 120% of what they need to charge.

Company A then pays the 20% VAT money it receives to the Taxman (minus loads of expenses) and Company B then claims back from the Taxman the whole 20% of the 120% they paid.

In effect, Company A collects 20% VAT and hands it to the Taxman (minus expenses – so they give less than the full 20% to the Taxman)… the Taxman then hands back to Company B the full 20% VAT which Company B shelled-out. So:

– Company B has lost some money for a short time but ultimately pays nothing.

– Company A has passed on less than full 20% to the Taxman, who has then paid the full 20% to Company B

– So Company B has, ultimately paid nothing and the Taxman has paid out more than he received.

At this level of companies, millionaires and other people who can afford accountants, the whole thing goes round in a circle and creates jobs but not tax revenue. Am I missing something?

There are points in the system where Company A and the Taxman are holding onto money and earning interest on the money from bank accounts – well, Company A is. But that’s the basic system. The money goes round in a circle if you already have a lot of money.

At petrol stations, for example, companies and rich entrepreneurs and businessmen, in effect, do not pay any VAT at all – they claim it all back. But the less well-off who own cars have to pay the full extra 20% which they can’t avoid.

It’s a tax which specifically targets the less well-off which discriminates in favour of the better-off.

It’s obscene.

2 Comments

Filed under Finance, Politics

2 responses to “The most obscene tax in Britain (and Europe)

  1. Ash

    In theory, the idea was that it was made fair by the concept that you only pay VAT on items you want but don’t need. Hence, only those with disposable income would pay.

    So, a list was made up of basic items which were necessary for everyone to buy, and these were all made VAT exempt.

    The problem is, this list is horribly out of date, leading to bizarre anomalies like the fact that biscuits and cake are both VAT exempt but cookies are not. (And the idea that, in the modern world, cake is a necessity, but computers are not.)

  2. Mich Strutt

    Whilst companies companies may escape VAT they do have to pay Corporation Tax and other taxes.

    VAT is specifically a consumer tax which supposed to be paid on the final delivery of service – so if I am a company and I buy grain from a farmer – VAT is only supposed to be paid by the consumer once it is turned into a loaf of bread that they have bought.
    (except that this is not a great example because you don’t pay VAT on food).

    I agree that big business and their team of tax-avoiding accountants can be slippery buggers but VAT is thought by many to be the fairest type of tax because you only pay tax on the things that you consume. (So I wouldn’t pay tax on someone else’s purchase of a BMW).

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