Wednesday 22 May 2013

Zero VAT

Why are there zero VAT rates for foodstuffs, books, pharmaceuticals, medical, passenger transport, newspapers, children’s clothing?

Yes, I've heard the argument that these are "necessities, not luxuries". But look at the other countries in Europe that apply VAT. Hardly anyone else has a zero VAT rate; only Malta and Ireland, and there might be some British influence there.

I think it comes from the old concept of "purchase tax", where the rates depended on who "luxurious" the goods were.

But it just doesn't make sense to me (especially the idea that books and newspapers are a necessity of life). And anyway, the whole concept of VAT isn't about how "luxurious" things are. It's purely about their value.

And a reduced rate for domestic and charity-consumed fuel and power? Property renovations? Quit-smoking products? I just don't see any good justification.

We should put 20% VAT on everything.


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