# Is VAT unfair?



## davidtube

This is something I've been thinking about for years. Literally about 6 years. If we got rid of VAT and replaced it with an increase in income tax, would that be a simpler and more importantly fairer system?

I would happily write an essay on my reasonings, but I don't think anyone would want to read it. 

So does anyone agree or disagree and why?


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## ajapale

Is any tax fair?


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## mathepac

I'd be of the opposite view, favouring taxation on spending rather than income.

Direct income taxation at source was introduced by the Brits around the time of the 1st World War as a "temporary measure" to raise funds to allow the the British, German and Russian royal families to resolve the imperial ambitions and differences between cousins using the lives and money of millions of innocent people as the tools. This was the time the Brit royals adopted the family name "Windsor" as a PR exercise in order to be seen by their subjects as truly British, old chap,  rather than German.

Like sheep, when we won partial political independence, we continued with the seriously flawed taxation and administration models we inherited and to this day we match the Brits step for step, blindly repeating every single mistake they make, including the naming of benefits and  governmaent departments, organisation, and nearly all of Blair's quangos, responsible for nothing and aswerable to no-one, eating up huge chunks of direct and indirect taxation.

I'd read your essay, but I wouldn't hold my breath until  its implemented.


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## joejoe

ajapale said:


> Is any tax fair?


 
Yes it is, it would be unfair to think we shouldnt pay any taxs. Taxs are for every ones benifit, just some are unjust towards some sections of society.

Joejoe


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## davidtube

mathepac, that's quite interesting. I'd never heard where income tax first came from.

Can I ask why you prefer to tax spending rather than income. It is to encourage saving?


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## niceoneted

I would also favour taxing spending over income. Few reasons being that there are people who at all cost will try to avoid income tax so at least they give something back on their spending. Likewise there are people who unduly are in receipt of state benefits some who use that money in a bad way (they really don't know or care for budgeting), thus through their spending they are giving something back to revenue. 

However I do feel that VAT needs to revised ie the rates and also types of items that are within various VAT brackets. 
Also income tax I feel needs to go back to three bands. Low income, middle income and high income with the high income being over 100K


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## davidtube

That is one good advantage of VAT, that it's hard to avoid. Although it's not impossible to avoid and lots of business goes on undeclared to avoid VAT charges. 

The other major advantage of VAT is it supposedly taxes luxuries not necessities. I don't believe this works in practice. For example, some of these "luxuries" include heating your house, while children's clothes (apparently clothes aren't necessary for adults) aren't taxed, including (correct me if I'm wrong) a £150 pair of trainers.

The only argument for VAT that i can't think of that is truly valid, is charging it on products that have a detrimental effect to society. The VAT can count towards reducing negative effects the good causes such as pollution or illness. Currently though there's pretty much a flat rate of VAT apart from on main the pollutants. So I'd keep VAT on certain goods, but for the vast majority, remove it.

Having said that, I think this outweighs the positive side of VAT. The main reason I disagree with it is that a millionaire who buys an alarm clock pays a much lower percent of their income in taxes, than someone earning minimum wage (making it a regressive tax). If the 17.5% (in the UK) were added to income tax instead, they would both be losing the same amount of their income. 

Even better (in my left-wing mind) would be the millionaire paying an extra 20% and the minimum income person paying 10% (the extra 2.5% tax of extremely rich more than making up for the reduction in the low income tax, and making it a progressive tax).

The tax on the clock using VAT could have cost the low income person half an hour's wages, while only costing the high earner 1 minute's wages. The income tax method (using the 10% and 20% i just came up with) would reduce the time taken to earn the tax money to 17 minutes for the low earner, but increased the time for the high earner by only a few seconds. A vast improvement for the person on low income, and an almost insignificant decline for the high earner.

NOTE: I haven't worked out what percentages of income tax would recover loss of VAT, the figures above a just estimates.


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## mathepac

davidtube said:


> mathepac, that's quite interesting. I'd never heard where income tax first came from....


That's not what I said. There have always been taxes on income / wealth / production, levied both by churches and civil powers. The change introduced during WWI was direct taxation of income / wages at source i.e. PAYE.

Previous taxes were retrospective, gathered at harvest-time, etc.


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## davidtube

Yeah, of course.


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## askalot

mathepac said:


> That's not what I said. There have always been taxes on income / wealth / production, levied both by churches and civil powers. The change introduced during WWI was direct taxation of income / wages at source i.e. PAYE.
> 
> Previous taxes were retrospective, gathered at harvest-time, etc.



From Wiki :

"The UK introduced PAYE in 1944 [1], following trials in 1940-1 [2]. As with many of the United Kingdom’s institutional arrangements, the way in which the state collects income tax through PAYE owes much of its form and structure to the peculiarities of the era in which it was devised. The financial strain that the Second World War placed upon the country meant that the Treasury needed to collect more tax from many more people. This posed significant challenges to the government, and to the many workers and employers who had previously never come into contact with the tax system".

http://en.wikipedia.org/wiki/PAYE

Different war - maybe more justified?!


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## davidtube

Never take anyone's word for anything. Always back it up with a check on wikipedia.


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## joejoe

davidtube said:


> Never take anyone's word for anything. Always back it up with a check on wikipedia.


 
Where does the info come from on wikipedia and who checks it? Sorry for going of topic.

Joejoe


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## diarmuidc

davidtube said:


> The main reason I disagree with it is that a millionaire who buys an alarm clock pays a much lower percent of their income in taxes, than someone earning minimum wage (making it a regressive tax).


Put isn't that irrelevant? If a millionaire never spends his money but leaves it in the bank won't he have the same living standard as someone on the poverty line (obviously by choice). As soon as he starts to spend then you tax him, like everyone else. Does it really matter if he has lots of paper in the bank?


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## ubiquitous

davidtube said:


> That is one good advantage of VAT, that it's hard to avoid. Although it's not impossible to avoid and lots of business goes on undeclared to avoid VAT charges.



VAT is the most evaded, and the most complicated, of all taxes.


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## ClubMan

joejoe said:


> Where does the info come from on wikipedia and who checks it? Sorry for going of topic.


Have you tried reading the _Wikipedia _documentation on how articles are authored and managed?


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## csirl

> Having said that, I think this outweighs the positive side of VAT. The main reason I disagree with it is that a millionaire who buys an alarm clock pays a much lower percent of their income in taxes, than someone earning minimum wage (making it a regressive tax).


 
Actually what you are proposing is a regressive tax. A regressive tax is one in which people get taxed by a higher percentage when their earnings rise i.e. discourages a more productive life.

VAT only is a neutral tax regime as everyone pays the same percentage.

A progressive tax regime is one which encourages people to be more productive.

I've asked this question before on this forum & elsewhere, but why should a millionaire who is buying an alarm clock pay a higher rate of VAT (or any tax)? I've never received a credible answer. The only response I've ever got is a sour grapes "because s/he earns more", which doesnt make sense. Taxing people more for working harder or better penalises production which hinders the economy.


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## sparkeee

luckily we have an irish tax system,where only the poor pay tax and the irish royalty,ie the racing fraternity the politicians and the upper crust pay no tax,much better than the brit system as mentioned above.


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## ubiquitous

sparkeee said:


> luckily we have an irish tax system,where only the poor pay tax and the irish royalty,ie the racing fraternity *the politicians* and the upper crust pay no tax,much better than the brit system as mentioned above.



Name three Irish politicians who pay no tax.


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## teachai

Actually I heard that Income tax was invented as a temporary measure to help pay for the crimea war (under the reign of Queen Victoria). 

Personally, I'd rather they scrap income tax and replace it with VAT. 

That means I'd only pay tax when I bought something, and if I can't afford it , I won't buy it. If I can afford it, I'll pay the VAT as part of the price.


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## davidtube

ubiquitous said:


> VAT is the most evaded, and the most complicated, of all taxes.


I’m not disagreeing with you but I'm not really sure about what is the most evaded tax, although VAT is tax that's very difficult to avoid for consumers. Completely agree that it's complicity is one of it's flaws.



ClubMan said:


> Have you tried reading the _Wikipedia _documentation on how articles are authored and managed?


                                                  Yeah, just try adding some incorrect information to Wikipedia and see how long it last. Wikipedia is a lot more well managed and accurate than people give it credit for. Less credible than a traditional encyclopaedia, a lot more credible than word of mouth, and containing a much greater amount of knowledge.




diarmuidc said:


> But isn't that irrelevant? If a millionaire never spends his money but leaves it in the bank won't he have the same living standard as someone on the poverty line (obviously by choice). As soon as he starts to spend then you tax him, like everyone else. Does it really matter if he has lots of paper in the bank?


As you say, it's by their choice they aren't spending the money. At the other end of the scale, the poorest people can't afford to keep savings. At the end of the day, the money is going to be spent somewhere, or it is just paper in the bank, so why tax it when it's spent, under (to me) the less justified method.




csirl said:


> Actually what you are proposing is a regressive tax. A regressive tax is one in which people get taxed by a higher percentage when their earnings rise i.e. discourages a more productive life.


Hold on, let me just check Wikipedia...


Sorry, I think Wikipedia agrees with me. 


			
				Wikipedia said:
			
		

> A *regressive tax* is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.[1][2][3][4][5] In simple terms, it imposes a greater burden (relative to resources) on the poor than on the rich.






csirl said:


> VAT only is a neutral tax regime as everyone pays the same percentage.



It's neutral in the sense that it costs everyone the same amount, but as a proportion of income, it costs poor people more.




csirl said:


> I've asked this question before on this forum & elsewhere, but why should a millionaire who is buying an alarm clock pay a higher rate of VAT (or any tax)? I've never received a credible answer. The only response I've ever got is a sour grapes "because s/he earns more", which doesnt make sense. Taxing people more for working harder or better penalises production which hinders the economy.



It's a very important question and it's not the first time I've been asked it. 
  In our fairly free economy, people don't earn money based on how hard they work. Firstly, people earn money based on the supply of that type of labour. So low skilled employees (almost can do the job), no matter how hard the person works receive a small wage. 
  Do highly skilled people work harder to achieve these skills? In some cases, for example doctors or pilots (I assume). But a lot of the time they don't, for example a typical historian compared with a marketing executive. 
  If you take professions in the public eye for example, take a class of budding actors. 30 people all working to varying degrees. It's not that hard to imagine a film director coming along and picking the star of his next film to be the person he judges to have the most talent out of the class, as opposed to their friend who spends 20 minutes more per day practising. 

That person goes on to become famous and ends up earning 100 times what the next highest earning brings in from the class. Even if that person was the most talented, and hard working, they certainly weren't 100 times harder working. It's an extreme example but something you find to a lesser degree everywhere. 
  A more common type of example; me and my partner. She works night shifts caring for old people in a home. She's paid minimum wage. I once put a website together in two days which made me more money everyday before I woke up in the morning than she made in a 12 hour shift. If half my money was taxed away, it wouldn't affect my quality of life much, if she had a 10% increase in taxes, she'd find it difficult to deal with.

Secondly income is based on the local economy, so someone in London earns more money than someone in... er, Nairobi. Well that's mostly just the luck of where you're born and brought up.

Thirdly... I can't think off the top of my head and this post is long enough.

So in summary, I don't think wages are fairly handed out depending on how hard you work, therefore taxing people more that earn 10 times as much for, say the same amount of time spent working (or even twice as much time working) is justified. That's why regressive tax is bad.




Thanks for your replies. It's good to get this off my chest and discus it with people.


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## ubiquitous

davidtube said:


> I’m not disagreeing with you but I'm not really sure about what is the most evaded tax, although VAT is tax that's very difficult to avoid for consumers. Completely agree that it's complicity is one of it's flaws.



VAT evasion is massive. Read the regular tax settlements list if you don't believe me. Consumers can and do evade VAT - look how commonplace "cash deals" are in the household building and other personal service trades

complicity? I presume you mean complicated? If you don't think VAT is complicated, read any Revenue VAT guide, especially on VAT on property. It will open your eyes.


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## davidtube

ubiquitous said:


> VAT evasion is massive. Read the regular tax settlements list if you don't believe me.


No I believe you. 



ubiquitous said:


> complicity? I presume you mean complicated?


Er, yeah. Sorry



ubiquitous said:


> If you don't think VAT is complicated, read any Revenue VAT guide, especially on VAT on property. It will open your eyes.


 My eyes are open to that. I agreed with you. I said it was one of the bad things about VAT.

Off topic: I found this forum by mistake. Why are most people in here Irish? I don't see anything particularly Irish about it.


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## diarmuidc

ubiquitous said:


> VAT evasion is massive. Read the regular tax settlements list if you don't believe me.


What are the figures on VAT tax evasion (in comparison to the VAT collected)?


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## ubiquitous

You should be able to find some indication of the level of detected evasion in the annual Revenue reports. The level of undetected evasion would be a different matter entirely.


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## Sunny

davidtube said:


> Off topic: I found this forum by mistake. Why are most people in here Irish? I don't see anything particularly Irish about it.


 
Because its an Irish website focused on Ireland.


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## csirl

> It's a very important question and it's not the first time I've been asked it.
> In our fairly free economy, people don't earn money based on how hard they work. Firstly, people earn money based on the supply of that type of labour. So low skilled employees (almost can do the job), no matter how hard the person works receive a small wage.
> Do highly skilled people work harder to achieve these skills? In some cases, for example doctors or pilots (I assume). But a lot of the time they don't, for example a typical historian compared with a marketing executive.
> If you take professions in the public eye for example, take a class of budding actors. 30 people all working to varying degrees. It's not that hard to imagine a film director coming along and picking the star of his next film to be the person he judges to have the most talent out of the class, as opposed to their friend who spends 20 minutes more per day practising.
> 
> That person goes on to become famous and ends up earning 100 times what the next highest earning brings in from the class. Even if that person was the most talented, and hard working, they certainly weren't 100 times harder working. It's an extreme example but something you find to a lesser degree everywhere.
> A more common type of example; me and my partner. She works night shifts caring for old people in a home. She's paid minimum wage. I once put a website together in two days which made me more money everyday before I woke up in the morning than she made in a 12 hour shift. If half my money was taxed away, it wouldn't affect my quality of life much, if she had a 10% increase in taxes, she'd find it difficult to deal with.
> 
> Secondly income is based on the local economy, so someone in London earns more money than someone in... er, Nairobi. Well that's mostly just the luck of where you're born and brought up.
> 
> Thirdly... I can't think off the top of my head and this post is long enough.
> 
> So in summary, I don't think wages are fairly handed out depending on how hard you work, therefore taxing people more that earn 10 times as much for, say the same amount of time spent working (or even twice as much time working) is justified. That's why regressive tax is bad.


 
Another case of sour grapes 



> The only response I've ever got is a sour grapes "because s/he earns more", which doesnt make sense.


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## diarmuidc

ubiquitous said:


> You should be able to find some indication of the level of detected evasion in the annual Revenue reports. The level of undetected evasion would be a different matter entirely.


Couldn't find any concrete figures in the annual report ( apart from receipts of €13.4b in VAT BTW). It's still not clear if VAT evasion is "massive" IMHO. Where did you get this fact/opinion? (BTW I'm not trying to imply you are wrong, just want the facts)


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## davidtube

csirl said:


> Another case of sour grapes


Well if that's sour grapes, income tax is a sour grapes tax altogether. You can't say progressive tax and regressive tax are both fair as they're complete opposites. Are you sure it's not wealthy person's sour grapes at seeing a lot of their money going to the government? Please explain why it is sour grapes. 

My whole argument was that wages are not distributed fairly. Do you agree that if everyone had the same job satisfaction and earned the same amount of money per hour (including during their training and eduction for the role) (effort=income) that would be completely fair? As we have a market economy, that's impossible, so progressive taxes help to even it out.


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## murphaph

If direct taxation was abolished in this country and replaced with increases in VAT, poor people would suffer more as the better off would buy more online (poor people don't have so much of the old internet/credit cards etc.) and of course, people with transport would be in Northern Ireland doing ALL their shopping. The exchequer would collapse.

So long as we share a land border with the United Kingdom, we must maintain a fairly similar tax regime. 

On principle I believe a mix of taxation (current system) is probably fairest anyway.


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## joejoe

ClubMan said:


> Have you tried reading the _Wikipedia _documentation on how articles are authored and managed?


 
I have now, thanks. Ive been enlightened!

Joejoe


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## ubiquitous

murphaph said:


> If direct taxation was abolished in this country and replaced with increases in VAT, poor people would suffer more as the better off would buy more online


..not if VAT was properly applied on all online transactions, as is increasingly the case anyway.


murphaph said:


> and of course, people with transport would be in Northern Ireland doing ALL their shopping....
> 
> So long as we share a land border with the United Kingdom, we must maintain a fairly similar tax regime.
> 
> On principle I believe a mix of taxation (current system) is probably fairest anyway.



Imho, you're 100% right on each count.


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## Markjbloggs

That's great - the Brits are to blame for everything.  Way to hijack a thread, dude, to spew your sectarian bile!  Grow up.



mathepac said:


> I'd be of the opposite view, favouring taxation on spending rather than income.
> 
> Direct income taxation at source was introduced by the Brits around the time of the 1st World War as a "temporary measure" to raise funds to allow the the British, German and Russian royal families to resolve the imperial ambitions and differences between cousins using the lives and money of millions of innocent people as the tools. This was the time the Brit royals adopted the family name "Windsor" as a PR exercise in order to be seen by their subjects as truly British, old chap,  rather than German.
> 
> Like sheep, when we won partial political independence, we continued with the seriously flawed taxation and administration models we inherited and to this day we match the Brits step for step, blindly repeating every single mistake they make, including the naming of benefits and  governmaent departments, organisation, and nearly all of Blair's quangos, responsible for nothing and aswerable to no-one, eating up huge chunks of direct and indirect taxation.
> 
> I'd read your essay, but I wouldn't hold my breath until  its implemented.


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## sfag

I'd thought Cardinal Wolsely invented income tax when he starting taxing the nobles according to their wealth thus relieving the burdon on the poorer. That was the 1500's.


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## sfag

"So in summary, I don't think wages are fairly handed out depending on how hard you work, therefore taxing people more that earn 10 times as much for, say the same amount of time spent working (or even twice as much time working) is justified. That's why regressive tax is bad. "

This is about using tax to undo an imbalance in wages. Tax Thinking like this allways hits those on middle incomes hardest as the poor dont neccessarily earn significantly more by being taxed less and the super rich have their own ways of reducing their tax bills.


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## Purple

davidtube said:


> It's a very important question and it's not the first time I've been asked it.
> In our fairly free economy, people don't earn money based on how hard they work. Firstly, people earn money based on the supply of that type of labour. So low skilled employees (almost can do the job), no matter how hard the person works receive a small wage.
> Do highly skilled people work harder to achieve these skills? In some cases, for example doctors or pilots (I assume). But a lot of the time they don't, for example a typical historian compared with a marketing executive.
> If you take professions in the public eye for example, take a class of budding actors. 30 people all working to varying degrees. It's not that hard to imagine a film director coming along and picking the star of his next film to be the person he judges to have the most talent out of the class, as opposed to their friend who spends 20 minutes more per day practising.
> 
> That person goes on to become famous and ends up earning 100 times what the next highest earning brings in from the class. Even if that person was the most talented, and hard working, they certainly weren't 100 times harder working. It's an extreme example but something you find to a lesser degree everywhere.


 When people choose a job/career they do so for a number of factors. The income they can derive from their efforts is one but job satisfaction etc also have to be taken into account. There are plenty of things that I would rather do than my current job but since I have responsibilities to my family and the people who work with me I do not have the luxury of being self indulgent. If I work longer, smarter and harder than my neighbour and take more risks (with the resulting stress) why should he get paid the same as me? If he should not get paid the same then why should I be penalised by paying a greater proportion of my larger income in tax?



davidtube said:


> A more common type of example; me and my partner. She works night shifts caring for old people in a home. She's paid minimum wage. I once put a website together in two days which made me more money everyday before I woke up in the morning than she made in a 12 hour shift. If half my money was taxed away, it wouldn't affect my quality of life much, if she had a 10% increase in taxes, she'd find it difficult to deal with.


 Was your partner aware of the pay levels when she started the job? If she was and choose to do the job anyway then the job satisfaction that she derives from her job should balance out the low pay. If it does not then she should get another job.



davidtube said:


> Secondly income is based on the local economy, so someone in London earns more money than someone in... er, Nairobi. Well that's mostly just the luck of where you're born and brought up.


 …but the quality of live derived from the lower income in Nairobi could be higher.




davidtube said:


> So in summary, I don't think wages are fairly handed out depending on how hard you work, therefore taxing people more that earn 10 times as much for, say the same amount of time spent working (or even twice as much time working) is justified. That's why regressive tax is bad.


 What constitutes “fair”?


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## Purple

murphaph said:


> On principle I believe a mix of taxation (current system) is probably fairest anyway.


I agree. In my opinion our tax system is, in general, fair.


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## QED

" So in summary, I don't think wages are fairly handed out depending on how hard you work, therefore taxing people more that earn 10 times as much for, say the same amount of time spent working (or even twice as much time working) is justified. " 


I generally agree with the above point but doesn't someone who invests time (and money) in getting a professional qualification or an entrepreneur who takes a risk, deserve to have more money?

Also, any talk of taxing high earners at 50% + is crazy because these are the type of people we need to drive Ireland forward.

P.S. I'm a long way from being a 'high earner' !


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## csirl

> Well if that's sour grapes, income tax is a sour grapes tax altogether. You can't say progressive tax and regressive tax are both fair as they're complete opposites. Are you sure it's not wealthy person's sour grapes at seeing a lot of their money going to the government? Please explain why it is sour grapes.


 
See Purple's last post which I agree with.

Using your logic, then richer or harder working people should be charged more for all things they buy? So if someone earning €1m per annum goes into Tesco and buys a can of beans, you think he should be charged 50 times as much for the can as someone earning 20k per annum? How is that fair? Its just sour grapes.

The Government is a service we all avail off, and so all should pay equally for it. Or are you proposing that votes are linked to income and people should get multiple votes in elections pro rata to the amount of tax they pay? Is that fair?

Remember that the fairest societies are those where all people have equal opportunities, not those where all people have equal income.


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## microsquid

In response to the OP I think that VAT is a little unfair, or to be precise, multiple taxation on the same euro is a little unfair.
You're taxed when you earn, taxed on the remainder when you save, taxed on the remainder of that when you spend... it's the double-dipping that annoys me.

I think our rate of VAT is too high (21% is well above the Euro-zone average) and it applies to too many things that I would not class as luxuries (electricity and groceries being a definite no).

I understand that taxes are a necessary ill, and they can even be a means of social correction, but I really would prefer to have something like eg. a three-band VAT with the lowest eg 7.5% (way below Eurozone average) applying to everything; the mid 19% (EU avg) applying to mini-luxuries (processed (ie convenience)/ unhealthy food, electricity/utility usage above a certain 'green' level, average consumer goods) and the high 27.5% applying to luxuries (Manolo Blahniks, anything with luxury or special edition in the title)

How does this sound to people?


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## ubiquitous

microsquid said:


> eg. a three-band VAT with the lowest eg 7.5% (way below Eurozone average) applying to everything; the mid 19% (EU avg) applying to mini-luxuries (processed (ie convenience)/ unhealthy food, electricity/utility usage above a certain 'green' level, average consumer goods) and the high 27.5% applying to luxuries (Manolo Blahniks, anything with luxury or special edition in the title)
> 
> How does this sound to people?



I would worry about any system that classes 19% as a "mid" VAT range

A 27.5% rate would merely encourage evasion and cross-border smuggling. In time it would become the default rate for most items, as many of today's luxuries are tomorrow's everyday goods, tech equipment & kids toys being two examples.

You cannot apply VAT rates based on having the word "luxury or special edition" in the title. Otherwise you end up with nonsense like the Power City "Clearance Madness" slogans when they cannot legally use the word "sale"


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## MOB

"Remember that the fairest societies are those where all people have equal opportunities, not those where all people have equal income."

I agree with this sentiment.  

But huge disparities in earnings are in themselves instrumental in reducing equality of opportunity.    Capital has a tendency to accumulate from one generation to the next.  This has a tendency to produce a wealthy elite class - which is always an obstacle to meritocracy.  To be blunt, the children of the Smurfit\O'Reilly\Magniers\Dunne dynasties, (and many others) clearly have economic opportunities which most people in our society do not enjoy.  

We poke fun at the British aristocracy, deriding the fact that they treat their elite position as a birthright rather than something earned.   But we are in danger of moving the same way and creating a similar class of "Trustafarians"  ( I know it doesn't strictly apply to the working wealthy, but I just love that word ) within a couple of generations.

It is not a simple problem.  A wise taxation policy should encourage enterprise, but should seek to prevent the concentration of wealth from one generation to the next.   

We must encourage the wealthy to breed like rabbits and to father children outside of marriage with gay abandon if we are to build a just society


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## Purple

MOB said:


> "Remember that the fairest societies are those where all people have equal opportunities, not those where all people have equal income."
> 
> I agree with this sentiment.
> 
> But huge disparities in earnings are in themselves instrumental in reducing equality of opportunity.    Capital has a tendency to accumulate from one generation to the next.  This has a tendency to produce a wealthy elite class - which is always an obstacle to meritocracy.  To be blunt, the children of the Smurfit\O'Reilly\Magniers\Dunne dynasties, (and many others) clearly have economic opportunities which most people in our society do not enjoy.
> 
> We poke fun at the British aristocracy, deriding the fact that they treat their elite position as a birthright rather than something earned.   But we are in danger of moving the same way and creating a similar class of "Trustafarians"  ( I know it doesn't strictly apply to the working wealthy, but I just love that word ) within a couple of generations.
> 
> It is not a simple problem.  A wise taxation policy should encourage enterprise, but should seek to prevent the concentration of wealth from one generation to the next.
> 
> We must encourage the wealthy to breed like rabbits and to father children outside of marriage with gay abandon if we are to build a just society



Or we could have inheritance tax...


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## csirl

Some people work hard in order to give their children an easier life - would these people lose motivation?

I'm not saying I'm in favour of generational wealth transfer as I have meritocrat tendencies, but there is a logic to wealth transfering with successful genes.


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## ubiquitous

Purple said:


> Or we could have inheritance tax...



Oddly enough, inheritance tax is not really much of a burden in Ireland, once you inherit from your parents and benefit from the €520k+ exemption. It is a major burden if you inherit from an uncle/aunt or from others in which case you're only entitled to €52k/€20k-odd exemption. I've yet to understand the rationale for this inequality.


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## Purple

ubiquitous said:


> Oddly enough, inheritance tax is not really much of a burden in Ireland, once you inherit from your parents and benefit from the €520k+ exemption.



If you inherit millions it is (since the point was made about the very rich).


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## ubiquitous

Purple said:


> If you inherit millions it is (since the point was made about the very rich).



It still isn't much of an issue for almost anyone. The combination of agricultural relief, business relief and to a lesser extent PPR relief means that individuals can sometimes transfer estates worth many millions to their children with zero CAT liability.


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## Purple

ubiquitous said:


> It still isn't much of an issue for almost anyone. The combination of agricultural relief, business relief and to a lesser extent PPR relief means that individuals can sometimes transfer estates worth many millions to their children with zero CAT liability.


Fair enough, you’re the accountant; I bow to your superior knowledge on the subject.


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## PostTiger

> It is not a simple problem. A wise taxation policy should encourage enterprise, but should seek to prevent the concentration of wealth from one generation to the next.


 
I dont believe an equitable tax system should penalise those who accumulate wealth, on which they pay tax and subsequently seek to pass that wealth on to the next generation.

Many would think it altruistic to leave ones estate to charity while if an estate was left, for example to an incapacitated child needing life long care, 20% tax would be imposed after the tax free threshold is exceeded.



> We must encourage the wealthy to breed like rabbits and to father children outside of marriage with gay abandon if we are to build a just society


 

How is a truly meritocratic tax system to be achieved? Tax smaller families more for larger inheritences?


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## MOB

"We must encourage the wealthy to breed like rabbits and to father children outside of marriage with gay abandon if we are to build a just society "

Just in case anyone is not absolutely clear, the ol' tongue was lodged firmly in the cheek when this comment was made.

There is a funny scene in the comedy "Dirty rotten scoundrels" where Michael Caine tries to educate Steve Martin on the "right" uses to which wealth can properly be put. -100 year old gardens brought back to life;  old wine ("of course I'd never drink it") and so on.   It caricatures something which is real - being the difference in attitudes to wealth in England and America.   I rather suspect that here in Ireland, we have not so much a middle ground between both attitudes, but that we have just have no societal consensus (which is no bad thing).  We like and respect 'old' values, but we vaguely resent 'old money'.  But we are divided on our views of 'new money' too.  

The fact is there is no easy answer to the problem of what (if anything) can or should be done about the accretion of massive wealth to a small number of people.   There is no easy answer to the question of whether very very large inheritances are a good thing for those who get them or for the society in which they live.  But it is certainly worth  continued debate.


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