Is VAT unfair?

[ubiquitous]

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.

 

[davidtube]

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

No I believe you.

complicity? I presume you mean complicated?

Er, yeah. Sorry

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.

 

[diarmuidc]

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)?

 

[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.

 

[Sunny]

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.

 

[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.

 

[diarmuidc]

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)

 

[davidtube]

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.

 

[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.

 

[joejoe]

Have you tried reading the Wikipedia documentation on how articles are authored and managed?

I have now, thanks. Ive been enlightened!

Joejoe

 

[ubiquitous]

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.

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.

 

[Markjbloggs]

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

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.

 

[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.

 

[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.

 

[Purple]

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?

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.

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.

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”?

 

[Purple]

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.

 

[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' !

 

[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.

 

[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?

 

[ubiquitous]

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"