Tax...it's just not fair

When the VAT rate goes up to 20% in January 2011, it will have risen exactly 100% from when it was first introduced. That’s right … value added tax (what a ridiculous name … where is the added value?) was introduced into everybody’s lives (by Ted Heath and his cronies in 1973) at what now appears an absolute bargain rate of 10%!

If the thought of paying another twenty pounds onto something only worth £100 doesn’t upset you, then perhaps the near certainty that in the near future this tax will also be added to existing zero rated items like FOOD, may get you stirred.

However, when you think about it, is VAT any more unfair than any other type of tax? The answer, of course, is … it depends on who is paying it!

From the government’s perspective, VAT is an easy option in every respect. It is an extremely difficult tax levy to evade, unlike some income taxes. It is also extremely easy to collect (not to mention cheap), because those businesses being forced to charge VAT simply pay it over to the Treasury every three months.

For the non-business person unable to claim back any VAT costs incurred, the increase feels not only unfair but also very painful. Even for non-VAT registered businesses such as dentists, finance consultants, and (in particular) taxi drivers, the added imposition of paying 20% extra on top of certain items, including necessary business fuel and repairs, is unbelievably excessive!

But is it any more unfair than say:

Council Tax: paid to a council (like Edinburgh) to waste on digging enormous holes all over the city for a non existent tram system - unbelievable!

Income Tax: used to bail out the banks for over-lending to businesses who in turn (probably) defaulted their own customers. Also used to bail out the tax man, leaving you to pick-up the tab – unbelievable!

National Insurance: collected from you for at least 30 years to ostensibly pay for your pension, which you may not live long enough to get (the state retirement age moving inexorably to 70) - unbelievable!

Just don’t get me started on Fuel Tax!

Have a Merry Christmas … if you still can.