Tag Archives: VAT

Liz Truss SAYS she’s trying to beat the cost-of-living crisis – but she isn’t

Liz Truss: another idea that she’s pretending is one thing while it’s actually completely different.

Here’s a potential truth bomb from Maximilien Robespierre on YouTube: Liz Truss has said she wants to help people beat the cost-of-living crisis but in fact it seems she’s just trying to cut VAT.

Here’s the clip:

So she wants us to think she can save families £1,300 per year by cutting all VAT by five per cent – but to achieve that, families would have to spend more than £30,000 on items on which VAT is levied.

Who does that – apart from the very rich?

And she reckons it would help businesses, even though it won’t affect the tenfold increase in their fuel bills. Many firms have already decided to close or suspend operations until real support is presented by the government.

Finally, the cut would take £38 billion out of the government’s hands every year (yes, I know – taxation takes money out of the economy altogether, rather than recycling it back in, but it also allows a government leeway to put the same amount back into public spending if it so desires).

And it would not help people on low incomes in any way because most of their expenses – apart from gas – are VAT-exempt. 

Also in the news: Keir Starmer’s betrayals of Labour are coming back to bite him

Keir Starmer: he never looks sure of what he’s doing, does he? One has to wonder if he’s being worked from behind.

It’s looking bleak for Keir Starmer as unions and constituency Labour Party organisations turn against him.

Skwawkbox provides an excellent chronicle of the conflict in Labour between the socialists who represent the soul of the party and the right-wing entryists, led by Starmer, who are working hard to wreck it, and This Site would like to direct you to the information that may be found there, such as the following:

Bootle Labour Party demands Starmer’s resignation over S**m column

The operative part of this is the wording of the motion that has won unanimous support from Bootle CLP:

Bootle CLP strongly condemns the party leader Sir Keir Starmer for his decision to renege on his promise to the people of Merseyside made during his leadership election campaign, to not speak to the S*n newspaper.

Therefore Bootle CLP calls for the resignation of the Leader of the Labour Party Sir Keir Starmer, on the grounds we no longer have any confidence in his leadership, as he says one thing, and then does the other.

Socialist lawyers condemn Starmer for suspending new NCC member

Well, you can trust Starmer to do the dirty on the Labour left – but of course he would never admit it.

Still, isn’t it strange that, days before the election of a new chairperson for the party’s National Constitutional Committee, which is still its only quasi-judicial disciplinary body (even if it doesn’t work properly, as This Writer knows too well), its newest left-wing member was suddenly suspended under suspicious circumstances.

Rheian Davies

who is a solicitor and a member of the [Haldane Society of Socialist Lawyers], was suspended by Labour last week over years-old and entirely accurate posts on social media and in a private group.

The Haldane Society posted a statement on Twitter condemning the attack by Starmer and his administrative sidekick David Evans on Ms Davies and on member democracy… In February, Haldane banned Keir Starmer from membership, saying that he was ineligible because he is ‘demonstrably not a socialist’ and condemned him ‘in the strongest possible terms’ for his conduct since winning the Labour leadership election on a set of false promises.

Starmer fights £20 weekly Universal Credit cut with plan to ‘pause’ VAT – saving 35p per week per person

Perhaps Starmer thinks we should be grateful that he – well, Rachel Reeves actually – has finally announced a policy. But it’s a stinker!

The party plans to ‘pause’ VAT on fuel in response to soaring energy costs. But VAT on fuel is at 5% and the average energy bill for a family of four adults at the moment is around £30 a week.

At a 5p saving in the pound, that’s just £1.50 per week – or 35p a week for each of the four household members.

Starmer’s other idea is a cut in business rates. Businesses pay 20% VAT and most can claim this back in full routinely anyway.

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Employers need to plan for the future. Why is the ‘party of business’ denying them this security?

Ditherer: Rishi Sunak doesn’t know how to safeguard businesses and the UK economy, or link its well-being with public health because the neoliberal dogma he learned does not accommodate phenomena like the Covid-19 pandemic.

Covid-19-related support packages for businesses are set to end soon, with no extension or replacement announced – signifying a £50 billion loss to the UK’s economy.

According to Tory plans the furlough scheme, rates holidays, tax deferrals, VAT cuts and other support packages will be closed at the end of the financial year.

But businesses are now expecting to be closed well into the spring and possibly beyond.

Tory Chancellor Rishi Sunak is not likely to announce his plans for the future of the economy until he makes his spring Budget statement on March 3 – too late for many firms, whose bosses will have to make decisions based on information currently available to them before that, if they are to be seen to be acting with responsibility to their shareholders, creditors and even employees.

Labour has demanded immediate action and, for once, Keir Starmer’s party is right.

Shadow business minister Lucy Powell also touched a raw nerve when she said Boris Johnson’s Tory government had failed to ensure that business support was integrated with public health measures.

As a result, the UK’s Covid-related recession had been the worst of any major economy.

And the longer Sunak dithers, the worst the situation will become.

Source: Businesses facing £50bn ‘bombshell’ as Covid support withdrawn, warns Labour | The Independent

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So much for ‘free trade’ between the UK and EU! Have you seen how much tax the TORIES are charging us?

Money, money, money: the UK government is coining it in VAT and other taxes since Brexit finally happened on January 1. And YOU are paying.

Tales of shoppers having to pay huge extra costs to have goods delivered from the EU post-Brexit are proliferating.

But that doesn’t mean we don’t have free trade!

It means our own – Tory – government is charging us extra in taxes.

It seems possible that this was the intention all along.

So in the BBC story (link below), one shopper was lumbered with a £12 extra cost for a £50 item.

UK VAT accounts for £10 of the extra £12 that Sascha was asked to pay. Sellers may also be charging higher delivery fees to cover any extra paperwork or border delays they may face.

On items costing less than £135, the charge is applied at the point of sale.

Another buyer was asked to pay £123 on top of £600 (and £25 delivery) for two designer handbags from Paris – when they arrived. This was still UK VAT, the BBC reckons, but because the items cost more than £135, the charge was applied when the items reached their destination.

A woman who received earrings as a gift, posted by a friend, was charged £28.85 by parcel handler DHL, even though they were sent before Christmas. Deliveries ran late so they arrived after January 1 – and came with the added taxes.

Gifts worth less than £39 don’t attract any extra charges… But gifts over that, like gold earrings, are eligible for VAT and (if it’s over £135) customs duties. And it’s always the recipient who receives the bill.

Import VAT applies for second-hand items as well as gifts, even if bought from a private individual.

EBay already has its system set up to charge the extra VAT upfront. Amazon says VAT will always be charged at point of sale on its site too. But the system won’t be running smoothly yet everywhere

Oh – and it works in reverse, too. A person in France, buying a £150 pair of boots from the UK, was asked to pay 88 Euros in import duty, breaking down to 43 Euros VAT, 30 Euros customs tax and a 15 Euro handling fee.

She was able to reject the delivery – but many others may not have the option as firms are

changing their terms and conditions so that customers have to cover the extra charges, even when goods are returned.

The BBC explained:

Shoppers on the continent buying from UK firms face the same rules as UK shoppers do in reverse so Jemima would have had to pay VAT and customs charges, because the boots or the materials they were made from, originated from outside the EU.

The revelations received this response on the social media:

Goods shortages, much higher prices, but at least we’ve got blue passports eh? How many still think #Brexit was a good idea? Voluntarily kicking ourselves when we’re already down,” tweeted Sheridan Webb.

Pete Franklin added: “That normal, apparently successful, people are being surprised by this gives us a clue why we are in this mess – they simply haven’t been paying attention. ”

Perhaps Steve Feasey put it best: “When Project Fear turns out to be Project Hasn’t-Everything-Got-Dear.”

And some have added this to the list of disasters caused by Brexit since the EU referendum in 2016:

Source: Brexit parcel price shock: ‘I had to pay £30 for a gift’ – BBC News

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Huge new VAT burden is ‘yet another aspect of Brexit’ the Leave campaign never mentioned

Barrels of port – a product exported to the UK – in a cellar in the city of Vila Nova de Gaia in Portugal [Image: Alamy].

Let’s be honest – this never crossed the minds of Boris Johnson, Michael Gove, Nigel Farage or even Arron Banks.

But what is currently a “paper exercise” will become a huge cashflow problem from UK importers, the instant Brexit comes into force, if it is allowed to happen on March 29, 2019 as Theresa May demands.

As a result of leaving the EU-VAT area – which is what hard Brexiters really, really want, remember – importers will have to pay VAT up-front on machine parts or ready-for-sale goods brought in from the EU, putting them seriously out-of-pocket.

Possible measures to avoid the issue involve staying in the Customs Union or negotiating to stay in the EU-VAT area. Neither would be tolerated by Brexiters.

This Writer wonders how many of the businesspeople affected by the change voted for Brexit. How many of their employees did?

Did they know they would be putting their livelihoods in danger? That’s the logical result of this situation; businesses may not be able to fund the deficit created by the change, with disastrous results.

Ah, but Brexit was the patriotic thing to do, wasn’t it? We had to get away from being ruled by those terrible unelected Eurocrats.

But there never were any unelected Eurocrats forcing us into anything – that was a lie. And it isn’t patriotic to lead your country into a no-win situation.

More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday.

The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy.

Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area.

The Labour MP and former minister Chris Leslie said that the VAT hit to firms was “yet another aspect of Brexit that the Leave campaign failed to inform the public about”. He added that he would be tabling urgent amendments to ensure the UK remained in the EU VAT area – a move that would enrage pro-Brexit MPs.

UK companies that import machine parts or goods ready for sale from the EU can currently register with HMRC to bring them into the UK free of VAT. They register the VAT charge and reclaim it later, all as a paper exercise. VAT is added to the price of the product whenever it is sold to the final customer.

Without a VAT deal with Brussels, importers will have to pay the VAT upfront in cash and then recover the money later, creating a huge outflow of funds before they can be recouped.

Source: UK companies will face huge new VAT burden after Brexit | Politics | The Guardian


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A quick thought about the Conservative ‘tax lock’ silliness

Anyone who thinks David Cameron’s promise of a five-year ‘tax lock’ is a good idea must need psychiatric help.

Cameron promised to introduce a law banning income tax, VAT or national insurance increases in the next parliament if the Conservative Party is elected back into office, clearly in the belief that anybody on average wages or less is too stupid to know what this means.

We know better, don’t we?

We know that taxes are set according to each income group’s ability to pay. This means that people in the lowest taxable bracket pay the lowest amount, as they need most of the money they earn in order to pay their way. The amount of tax then increases by increments up to the highest earners – who take home considerably more than they need to survive, and who can therefore afford to contribute a much larger amount with no impact on their quality of life.

We also know that a five-year ‘tax lock’ will not affect the lowest-earning people at all. Nobody earning up to £10,600 pays any tax at the moment, so a freeze on nothing is still nothing.

What will it do to the people in the highest tax bracket? Well, it depends what they earn and how fast their pay increases, doesn’t it? Let’s have a look at the handy guide to average UK pay rises, created by fellow blogger Tom Pride last November:

141112average-uk-pay-risesTomPride

So the director of a FTSE 100 company, paid the average amount of a mere £2.4 million, would have contributed 45 per cent in tax, or £1.08 million in the 2014-15 tax year. Over a five-year period, if that person’s income continued to rise at 14 per cent, then by 2020 – at a 45 per cent tax rate – they would pay a total of £8,138,360 in tax over the years until 2020. That’s certainly a respectable figure.

But Labour has proposed an increase in the top rate of tax, back to 50 per cent. Under the same conditions, this would mean FTSE 100 directors earning £2.4 million in the tax year 2014-15 would pay £9,042,623.

That’s a difference of £904,263; nearly a million pounds each.

This writer doesn’t have current figures for banker salaries and cannot, therefore, work out how much tax they would pay – but you can see for yourself that the difference between the two scenarios is likely to come to several million pounds per top banker.

Those people don’t need that amount of money in order to survive. The cost of living in the UK is less than 1/50 of what the FTSE directors take home, let alone the bankers. But David Cameron wants them to keep that money.

Meanwhile the UK Treasury goes without millions of pounds that could be used to help balance the national deficit, pay off the national debt, and boost the economy.

We’re back to ‘Starve the Beast’ economics again. The nation’s finances can go to Hell, as far as Cameron is concerned. He wants to starve the Treasury with tax cuts for the rich – either actual cuts or de facto cuts like his ‘tax lock’ – and then claim that public services cost too much and will have to be scrapped or sold off to rich corporations in return for donations to the Conservative Party – as we have seen in the years of the Coalition Government (most obviously in the case of the NHS).

Unless you are a banker, an FTSE100 director, or a member of Parliament, you would be mad to support such a wasteful and selfish plan.

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Do you know the horrifying facts about your own MP?

150319RogerWilliams

Don’t let the appearance of serious concern fool you – Roger Williams has done more harm than good in the last five years. Can you say that your MP hasn’t?

You can tell there’s an election on the way when the dreaded Liberal Democrat Block Graph appears in your letterbox.

“Only Roger Williams MP and the Lib Dems can stop the Tories here in Brecon & Radnorshire!” today’s leaflet screamed, while the graph pointed to a 10 per cent turnout for Labour (highlighted in orange – isn’t that the Lib Dems’ colour?) from 2010 to illustrate its point.

But 2010 was a long time ago. Since then, Roger has betrayed us all in Parliamentary votes many times.

Are you upset about the funding cuts to local government services? Roger voted for those cuts.

Struggling to pay your council tax? Roger voted strongly to make councils responsible for helping people pay – and for reducing the amount spent on that support.

Are you unemployed, sick or disabled? Roger voted strongly for cuts to welfare benefits, and for the uprating cap that means benefits don’t rise in line with prices.

He voted against investing public money in guaranteed jobs for young people who have spent a long time out of work.

He voted to increase VAT, but not to increase taxes for the immensely rich – and he fully supported cutting the rate of corporation tax, so rich firms became even richer.

Remember the bankers who caused the financial crisis? Roger voted against clawing back money from them. He refused to support the bankers’ bonus tax.

Remember the botched privatisation of the Royal Mail? Roger fully supported it.

He voted very strongly in favour of ending financial support for people aged 16-19 in training and further education.

He voted very strongly in favour of restricting access to justice so that only the rich can get a fair hearing in court, by restricting the scope of Legal Aid – and he voted for the creation of so-called ‘secret courts’.

He is in favour of the waste of money known as Police and Crime Commissioners, against restricting rises in rail fares, very strongly for selling off England’s state-owned forests and against green energy.

Oh – and he voted for the Bedroom Tax too.

He also voted very strongly in favour of the Tories’ creeping privatisation of the National Health Service.

His leaflet states: “The Tories want to cut pay for Llandrindod Wells’ nurses and teachers. Who can stop them?

Not Roger Williams, obviously. His record shows he has been cheering them on.

This writer actually helped vote Roger Williams into his Parliamentary seat, back in 2001. Admittedly it was a tactical choice, to make sure that the constituency did not go to a Conservative candidate.

Now I know that, given the chance, Roger won’t act in the best interest of the people, but in those of whoever gives him his orders that day.

But never mind my MP – how has yours behaved? You can find out on theyworkforyou.com

What you discover may surprise you!

And Llandrindod Wells’ nurses and teachers?

I would rather rip Roger’s throat out with my own teeth than make him responsible for their pay and conditions.

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Sign our petition to kill Osborne’s ‘tax statement’ propaganda sheet

141104taxleaflet2

[Image: Daily Mirror.]

Remember when the Transparency of Lobbying, Third-Party Campaigning and Trade Union Administration Act (otherwise known as the Gagging Act) was passed, in January this year? Vox Political warned that it marked the end of free speech and free protest in the UK.

The article showed that the new law means you may no longer link up with others to protest government actions in any meaningful way – as such action may breach Liberal Democrat and Tory government-imposed spending limits. Your personal complaints will be deemed unrepresentative of the people.

In that article, this blog asked why the government has launched its attack on free speech and free protest, and suggested the following: Perhaps it wants to control the information you receive, on which you base your voting intentions?

This week we received confirmation of that theory – or at least, some of us did.

The ‘tax statements’ being sent out to Income Taxpayers by the Treasury – on the orders of George Osborne – are nothing less than party political electioneering, being carried out using those taxpayers’ own money rather than the Tory Party’s funds. The leaflet is worded in a very carefully-chosen way that betrays a clear intention to mislead readers – most particularly about the amount of our Income Tax that is spent on ‘welfare’.

To illustrate the extent of the problem: We cannot say this is the same as social security, as – according to the terms of the leaflet – it isn’t. Apparently a quarter of our money is spent on ‘welfare’, which is then broken down into bizarre categories like ‘social protection’ – including, alongside social security, personal care services which nobody has defined as ‘welfare’ until know, and the pensions of retired mandarins, colonels and lowlier public servants who will be appalled to hear their hard-earned retirement provision re-labelled as ‘welfare’, according to The Guardian‘s editorial on the subject. David Cameron’s pension would be defined as ‘welfare’, according to this categorisation.

Meanwhile, state pensions have been defined as being paid from an entirely different source (they aren’t), in order to safeguard the Grey vote from the indignation that – clearly – this piece of politically-prompted propaganda is intended to stoke.

The fact is that – as the Mirror points out – Income Taxpayers put a lot more than 12p in every pound towards pensions, and a lot less than 24p in every pound towards working-age benefits.

Here are another couple of tricks – possibly the nastiest of the lot: Firstly, the leaflet does not make it clear that ‘welfare’ payments are made to people who have a right to them “because of family or medical circumstance, or indeed a record of national insurance contributions”. The impression foisted on the reader is of “unearned handouts to the poor”, according to the Guardian editorial.

Secondly, the leaflet as a whole does not mention the contribution of VAT payments to the national purse. This is because the government has cut Income Tax (irrationally – it has a huge deficit and debt to pay off but has reduced its own income). The thinking behind this is that people will think they have been allowed to keep more of the money they have earned. But the same government has increased VAT, meaning that – in fact – people are being taxed more heavily!

What is the intended result of all this deception? It is as Vox Political described, back in January:

“You would be led to believe that the governments policies are working, exactly the way the government says they are working.

“You would not have any reason to believe that the government is lying to you on a daily basis.

“You would be tranquillised.

“Anaesthetised.

“Compliant.”

What a relief that nobody believes that filthy liar Osborne – even his own backbenchers!

This is how they see him – offering empty promises as a ‘carrot’ to encourage voters to support the Tories.

Osborne’s behaviour is so appalling that this blog has started a petition, calling on the government to withdraw these propaganda sheets that pretend to be official government information – and apologise for ever releasing them in the first place.

It is on the Change.org website, please sign it by clicking here.

Other blogs on the ‘tax summaries’ are available from Virtual Gherkin and Same Difference.

We must not allow this abuse of public authority – and public funds – to take place.

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The taxless recovery – Flip Chart Fairy Tales

This is no ordinary recovery, according to Flip Chart Fairy Tales. Not only has it taken a hell of a long time to do not very much, it’s seen collapsing productivity and very little wage growth, even for those who appear to be highly skilled. As a result of all this, even though the economy grew at over 3 percent, tax revenues didn’t increase at the same rate.

As Ben Chu’s chart shows, most of the rise in tax revenue since the recession is due to VAT.

ByNkhCfCYAAZgJg

Record numbers of people in employment, it seems, hasn’t led to record levels of income tax.

When you break out the figures for income tax, as Michael O’Connor did earlier this week, there is a marked difference between receipts from those on PAYE and those on self-assessment.

ByTN88ZCMAAqt1l

Falling self-assessment receipts are, for the most part, a symptom of falling self-employment incomes. Around three-quarters of the employment growth since the recession has come from self employment yet between them, the self-employed are still delivering a lot less tax. We won’t see the final 2013 HMRC figures for self-employment incomes until January but these charts suggest that the spectacular fall in self-employment earnings between 2008 and 2012 hasn’t improved by much. Probably the closest estimate we have for self-employed pay since 2012 is by Laura Gardiner at the Resolution Foundation. The low tax receipts indicate that self-employed earnings may have continued to fall or are, at best, stagnating.

Screen Shot 2014-07-10 at 16.43.58

Things might be about to get worse for some of the self-employed. As Ben Dellot explains, the new Universal Credit system could leave many of them worse off. According to the RSA’s calculations, 37 percent of the self-employed earn less than the minimum income floor, which is set at around the full-time minimum wage. (That sounds about right. A study by the IFS found that 40 percent of the self-employed earn less than the minimum wage.) Not all the self-employed currently claim tax credits but those who do, and who fall below the income floor under the new system, will find their benefits cut. The self-employed now account for almost a fifth of tax credit claimants so this is likely to affect a lot of people.

Read the rest of the article on Flip Chart Fairy Tales.

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The self-employment deception will leave Osborne wrong-footed over tax returns

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it.

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it. [Image: Ros Asquith in The Guardian]

It seems a surge in the number of people who say they are self-employed is not (solely) due to a DWP wheeze that gets people off the unemployment statistics after all.

Instead, Flip Chart Fairy Tales warns that a lot of people are staying in self-employment rather than becoming employees again or retiring.

This suggests that either they have not been able to reach their target in terms of pensions, or there are no jobs available for people of their particular expertise or experience. The latter seems likely to Yr Obdt Srvt, who is currently trying to make Vox Political a workable concern in order to make a buck or two.

FCFT warns that “this is old-timers seeing their business shrink, rather than newbies trying to find their feet, under-charging and messing things up”.

The figures also show an increase in the number of self-employed tax credit claimants, lending credence to Vox Political‘s long-held belief that Job Centre Plus advisors have been telling jobseekers to pretend they are self-employed in order to get them off the books – let’s not write off that idea too quickly.

And a steady rise in non-VAT-paying businesses not only tells us “a lot of low-profit and low-turnover businesses are hanging on in there, or a lot more of them have become low-profit and low-turnover businesses since 2008”, it tells us that George Osborne will have a nasty surprise in January, when their tax returns come in.

If they are not paying VAT, they are not clearing the earnings threshold that would make such payments necessary. This mitigates against their earnings having increased significantly since the disasters of 2008-2012, when self-employed earnings fell by £8 billion.

So it seems our dancing Chancellor (see yesterday’s post) will find that either the music stops or the tune will change significantly…

Less ‘Gold’ by Spandau Ballet; more ‘I Don’t Need This Pressure On’.

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