Regarding the threshold, what would be the implications of a 0.25% VAT for each £1k from £5k onwards (perhaps based on previous year's turnover)? In other words, would it be possible to remove the cliff edge?
Removing the cliff edge on VAT could make it less distortionary. However this is similar to the personal allowance taper that effects high income workers. Most businesses below the threshold will be sole traders, so tapering their VAT threshold creates a marginal tax rate which may interact strangely with other taxes on that person's income. Additionally, alot of businesses below £50k turnover won't be worth the compliance cost: e.g. they charge their customers £10k in VAT and the VAT on costs was £5k, so the tax is only worth £5k. Finally, the eventual rate paid likely wouldn't be determined by the previous years' turnover. It could however be used for an estimate though I don't think the taxman expects us to pay tax in advance.
Think it’s was when she said that although it’s a higher proportion of poorer incomes, richer people contribute more to VAT in cash terms, as well as zero rating being targeted towards goods that poorer households buy.
VAT everything at 10% no exceptions, including against business. Increase productivity by having work workers available to stop focusing on VAT compliance and less paid by HMRC working on what is and isn't VAT chargeable. Sure it might put make cost of living in the short term a bit higher, but long-term it allows businesses to comply, future projections and productivity.
@SmithyD86 I don't need to. You've made a massively unsubstantiated claim that's clearly nonsense not me, it's not for me to teach you commonsense or deductive reasoning.
1) Increase the VAT threshold to at least £150,000 2) Subsequently lower the VAT rate to 10% (remove all exemptions). 3) VAT at 0% for sanitary products, charities etc. 4) Reinstate VAT-RES: allowing international tourists to claim the value added tax on items purchased during their stay in the UK.
Making Exempt supplies would restrict the amount of vat your taxable supply business can reclaim (unless it is only de minimis ie small). Outside the scope can be completely ignored.
If we're going to have a VAT exemption on some food, we should probably make the thing that determines it more sensible. Perhaps replace the sugar tax and the tax on chocolate biscuits by saying that food with a sugar/fat content is above a certain percentage, it isn't vat exempt but if it's below that it is exempt. So we distort the market, but in a consistent way to acheive desired effects.
VAT was introduced when the UK joined the common market, and it replaced purchase tax. As we are no longer in the EU, why not abolish it and re-introduce purchase tax at a single fixed rate on all goods and services?
Because increasing the taxes on food and children's clothing is going to push parents and children further into poverty and potentially decrease our national birthrate even further.
@@stevenwilliamson6236 They have more money to spend because of lower corporate tax rates, lower amount of people claiming credits and budget surpluses
Surely we could move the threshold to, say, £250K turnover…. then increase the VAT amount to 23%, for example, to offset any loss? Small businesses turning over £85K are ABSOLUTELY bothered about compliance costs. I mean, that’s just about enough for a good solid wage for someone who has the burden of running their own company…. and we all know that every company has outgoings, so it’s going to be nowhere near £85K profit. A company turning over £250K plus is far less likely to be as affected by the compliance cost. Also, another question, when we transition to a cashless society (inevitable) and all money is easily traceable, what happens to the tax system then? We can cut a LOT of government cost and simply take tax immediately from every business and person with ease, it’ll just be programmed in. What then?
Moving the threshold up isnt the best idea because the same distortion will occur, just impacting businesses that are worth more. So the effect of the distortion is sacrificing even more lost potential.
@@noahjohnson8740 That is incorrect. The compliance cost for a business turning over. £250K is far less concerning than for a business at £85K. That is why thousands of small companies purposefully stay under the threshold. Allowing people to reach £250K will 1) allow most to voluntarily reach vat registration of their own accord when the time is right AND 2) allow companies to actually see if there is something worth risking everything for and actually giving it a go. How can you know at just 85K? How many big companies have we never seen explode due to this threshold? We'll never know. Raising the threshold allows companies to actually build something worth pursuing withut being crippled at the first sniff of any small success.
Is this the so called 'BBC Independent Tax specialist' on here again....Dan Neidle... actually he is a Labour party member.... with slanted viewpoints...not very 'independent' is he ?
This is fantastic, I would never have thought a discussion on tax could be so fascinating. Keep up the good work!
Regarding the threshold, what would be the implications of a 0.25% VAT for each £1k from £5k onwards (perhaps based on previous year's turnover)? In other words, would it be possible to remove the cliff edge?
Removing the cliff edge on VAT could make it less distortionary. However this is similar to the personal allowance taper that effects high income workers. Most businesses below the threshold will be sole traders, so tapering their VAT threshold creates a marginal tax rate which may interact strangely with other taxes on that person's income.
Additionally, alot of businesses below £50k turnover won't be worth the compliance cost: e.g. they charge their customers £10k in VAT and the VAT on costs was £5k, so the tax is only worth £5k.
Finally, the eventual rate paid likely wouldn't be determined by the previous years' turnover. It could however be used for an estimate though I don't think the taxman expects us to pay tax in advance.
Love this channel working my way though the back catalogue. I didn't hear your justification for why vat was not regressive? I don't understand.
Think it’s was when she said that although it’s a higher proportion of poorer incomes, richer people contribute more to VAT in cash terms, as well as zero rating being targeted towards goods that poorer households buy.
VAT everything at 10% no exceptions, including against business. Increase productivity by having work workers available to stop focusing on VAT compliance and less paid by HMRC working on what is and isn't VAT chargeable.
Sure it might put make cost of living in the short term a bit higher, but long-term it allows businesses to comply, future projections and productivity.
You're clueless.
@@mikefish8226 you might be right. Might be wrong. You haven't presented any kind of argument so how would I know?
@SmithyD86 I don't need to. You've made a massively unsubstantiated claim that's clearly nonsense not me, it's not for me to teach you commonsense or deductive reasoning.
Remove all the exemptions and lower the rate make a very slightly increased amount of items being VATable 21:30
1) Increase the VAT threshold to at least £150,000
2) Subsequently lower the VAT rate to 10% (remove all exemptions).
3) VAT at 0% for sanitary products, charities etc.
4) Reinstate VAT-RES: allowing international tourists to claim the value added tax on items purchased during their stay in the UK.
Never figured the difference between "VAT exempt" and "out of scope" - which show up as separate categories on our accounts :(
Making Exempt supplies would restrict the amount of vat your taxable supply business can reclaim (unless it is only de minimis ie small). Outside the scope can be completely ignored.
If we're going to have a VAT exemption on some food, we should probably make the thing that determines it more sensible. Perhaps replace the sugar tax and the tax on chocolate biscuits by saying that food with a sugar/fat content is above a certain percentage, it isn't vat exempt but if it's below that it is exempt. So we distort the market, but in a consistent way to acheive desired effects.
Can you please do video on Milton Friedman on his policy and philosophy on taxes
VAT absolutely is regressive.
Enjoy these videos. Thanks.
VAT was introduced when the UK joined the common market, and it replaced purchase tax. As we are no longer in the EU, why not abolish it and re-introduce purchase tax at a single fixed rate on all goods and services?
And the reason for that would be...?
@@nikolaimiroshnichenko2689would be an excuse to reform the system ig
Because increasing the taxes on food and children's clothing is going to push parents and children further into poverty and potentially decrease our national birthrate even further.
so you would like to channel even more money onto the benefit system, right, sounds like a great way to move the country in the right direction -
Benefits are already too low. 40 hours of minimum wage work is lower than Ireland's unemployment payment and their housing benefit is also higher.
@@stevenwilliamson6236 They have more money to spend because of lower corporate tax rates, lower amount of people claiming credits and budget surpluses
It's Britain, of course the tax system makes no sense
Why paul sound more and more like ian hislop Worrying lol
Surely we could move the threshold to, say, £250K turnover…. then increase the VAT amount to 23%, for example, to offset any loss?
Small businesses turning over £85K are ABSOLUTELY bothered about compliance costs. I mean, that’s just about enough for a good solid wage for someone who has the burden of running their own company…. and we all know that every company has outgoings, so it’s going to be nowhere near £85K profit.
A company turning over £250K plus is far less likely to be as affected by the compliance cost.
Also, another question, when we transition to a cashless society (inevitable) and all money is easily traceable, what happens to the tax system then? We can cut a LOT of government cost and simply take tax immediately from every business and person with ease, it’ll just be programmed in. What then?
Moving the threshold up isnt the best idea because the same distortion will occur, just impacting businesses that are worth more. So the effect of the distortion is sacrificing even more lost potential.
@@noahjohnson8740 That is incorrect. The compliance cost for a business turning over. £250K is far less concerning than for a business at £85K. That is why thousands of small companies purposefully stay under the threshold. Allowing people to reach £250K will 1) allow most to voluntarily reach vat registration of their own accord when the time is right AND 2) allow companies to actually see if there is something worth risking everything for and actually giving it a go. How can you know at just 85K? How many big companies have we never seen explode due to this threshold? We'll never know. Raising the threshold allows companies to actually build something worth pursuing withut being crippled at the first sniff of any small success.
Is this the so called 'BBC Independent Tax specialist' on here again....Dan Neidle... actually he is a Labour party member.... with slanted viewpoints...not very 'independent' is he ?
Blue jumper man needs to write a script and stick to it!