Consumption Tax?

[Snail]

Was listening to bbc radio this morning and heard an economist put this forward.

Basically, those who spend the most pay the most tax. He believed it would prove most benefical long-term. Couldn't stick around to hear the rest of it, but thought the idea interesting.

Especially an economist saying this. Maybe out-of-box thinking's starting to occur.

[Tarrel]

Isn't that what VAT is?

[UndercoverElephant]

Isn't that what VAT is?

I didn't hear it, but I'm guessing the suggestion was a lot more VAT and a lot less of other taxes. [hijack]Personally I'd just slap a massive wealth tax on the rich. One that would make it utterly pointless trying to accumulate more than a few million pounds.[/hijack]

[mobbsey]

What about investments? The rich don't spend their money on "stuff", they spend it on organisations.

[Snail]

Literally was only able to listen for a couple of minutes. Been mulling it over.

In the past most Governments I think raised most of their taxes from imported luxury goods, therefore affecting the rich mainly. Of course, the downside is increased smuggling.

Maybe this is why the USA consumes so much, as I don't believe it has VAT, or at least a much lower rate.

Yes, increase in VAT/lower IT is one way. Doesn't have to be a flat rate, but can depend on type of goods/where its made etc..

An electronic spending card with your income bracket details? Someone with a high income would pay more VAT than someone on a low wage.

It could be used to tackle demand issues by taxing excessive spending on consumer goods. Finished goods are the end products of exploited natural resources, so it makes some sense to tax from this direction. But an unfortunate side-effect of channelling money into investments and savings, and other virtual things.

It could hurt the poor when they spend on non-basic goods. And other ways of tackling the wealthy are still needed.

Probably as bad an idea as every other tax system!

[SleeperService]

Consumption tax will never work fairly and when it's been tried it hasn't either. The rich don't spend their money domestically as much as the poorer do so will avoid higher rated economies as they do now. Some luxury items are zero rated for VAT as it is.

The simplist and fairest tax system is on income. Have the same rate of tax on ALL forms of income whether wages, bonuses, business profits, interest from investments etc. Couple this with a tax free threshold that is the ONLY thing that gets moved and everybody gets taxed the same with those towards the bottom of the earnings ladder paying less to zero.

The only consumption tax would be VAT but only charged on items that were socially damaging. So VAT on McD, fuel, luxury items such as big cars yachts etc. Any money transferred out of the domestic market would pay 20% tax as well.

But no right wing think tank will put an economist on TV to suggest anything like that would they?

[the_lyniezian]

I recall someone on one of those alternate history boards I go on positing the idea of trying to run a nation on "sin taxes", and whether it would be possible or not. Thing is you'd probably need a very broad definition of potentially harmful products, hopefully including taxes on things which are very bad polluters, and probably have to legalise things like drugs and prostitution (not something I'd welcome entirely but with the latter at least you'd have a steady income...)

[Little John]

Was listening to bbc radio this morning and heard an economist put this forward.

Basically, those who spend the most pay the most tax. He believed it would prove most benefical long-term. Couldn't stick around to hear the rest of it, but thought the idea interesting.

Especially an economist saying this. Maybe out-of-box thinking's starting to occur.

This is a bad and iniquitous idea because it penalizes the poor even more than they already are.

If you are forced to spend 100% of your income on goods ands services simply to get by, then you will be subject to this tax being imposed on your entire income.

However, if you are rich and you only spend a tiny proportion of your income on actual consumption then only a tiny proportion of your income will be subject to a consumption tax.

This can all be resolved really easily with a simple progressive income based tax and we could do way with consumption taxes altogether. The reason we don't have such a simple and straightforward arrangement should be blindingly obvious;

The poor don't set tax policy. The rich do.

[snow hope]

The poor don't set tax policy. The rich do.

And whether you are part of the Tories, who don't give a sh1t about the poor, or whether you are part of the Liberals who think the world should all be a lot fairer for everybody, or part of Nu Labour who pretend to care (but don't really) about the poor, the rich will continue to set the tax policy.

As has been said before, it doesn't really matter who you vote for, the same outcomes will occur.

[emordnilap]

This can all be resolved really easily with a simple progressive income based tax and we could do way with consumption taxes altogether.

Is this something you really believe in? What about accurate taxes that should be in place as deterrents to spending on pollution, such as cars and patio heaters, air freight and McBurgers? I would have thought you'd be in favour of those.

The reason we don't have such a simple and straightforward arrangement should be blindingly obvious;

The poor don't set tax policy. The rich do.

+1 (For 'such as' read 'any')

[energy-village]

I heard this, I didn't pay close attention as it sounded like a call for scrapping all progressive taxes - more neo con lunatics getting air-time..

[Little John]

This can all be resolved really easily with a simple progressive income based tax and we could do way with consumption taxes altogether.

Is this something you really believe in? What about accurate taxes that should be in place as deterrents to spending on pollution, such as cars and patio heaters, air freight and McBurgers? I would have thought you'd be in favour of those.

The reason we don't have such a simple and straightforward arrangement should be blindingly obvious;

The poor don't set tax policy. The rich do.

+1 (For 'such as' read 'any')

I know what you are getting at E. But, you can be sure that there will be exceptions fiddled into place for the powerful and the wealthy.