During my time working for a certain revenue department, I learned a basic economic truism. If you increase direct taxation, it generally benefits the poor. If you increase indirect taxation, it generally benefits the rich. I realise that there are a few complexities involved, but the axiom is easily demonstrable.
The measures announced by the Chancellor today in the ‘emergency budget’ included an increase in Value Added Tax (Britain’s main form of indirect taxation) from 17½% to 20% with effect from early January.
Back in the 1970s the basic rate of Income Tax was 33%. VAT was, at its lowest, 8%. Those figures have changed dramatically. Basic rate Income Tax is now 20% and VAT will soon be 20%. So, over the last thirty five years, there has been a steady reduction in direct taxation and a steady increase in indirect taxation. The question I have is this:
Why do people still feign surprise when statistics repeatedly show a continuing growth in the gap between rich and poor?
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I've been doing a lot of moaning this week. Maybe tomorrow I'll tell the story of The Very Mean Sicilian with the Very Big Knife.
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6 comments:
Your moaning hasn't fallen on deaf ears Jeff, I'm still pondering your "two little facts" which of course I believe are related. Too desolate to leave a reply on it. I did not know, however, about direct and indirect taxation and its effects. I thought Britain raising the VAT was a lesser evil than what else they might have up their sleeve. Oh, dear. Here in Germany the VAT is currently 19% and it wouldn't surprise me if it went up to 30. We're definitely all up the creek without a paddle, so-to-speak. Now distract us with a humorous tale! And try to have a nice, summer's day!
Oh dear! A Desolate Della was most certainly not my intention.
Yes, indeed. Our ex-public-schoolboy Chancellor in the expensive suit sweetened the pill of making the poor poorer by emphasising that the French and Germans are doing the same thing. We've even signed an accord, apparently. How nice. But at least our poor have fewer pounds, rather than fewer euoros, so that's OK.
Sickening but unsurprising, keeping the populace downtrodden, hungry and ignorant allows the those running the show to do what the hell they like. More channels on the telly may seem like freedom of choice but it's a slippery slope to stupification!
Oh dear I feel a rant coming on...
Hiya, Mel. Funny, I was thinking of doing a post on 'Where's Jeremy Kyle?' But it was more of an aside than a rant. In case you're wondering, no I don't watch Jeremy Kyle.
Had to google Jeremy Kyle ;)
Good for you. I'm relieved to hear it!
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