What percent did the VAT tax start at in the UK? What percent is it today? The problem of a VAT tax is the people will never know when the government raises the tax. The other problem is that the tax is put on at every stage of manufacturing and every time a product is sold. It’s my understanding that some countries have a VAT tax of over 25%. I don’t think this is what we want or need right now.
If this happens, people will stop purchasing and companies will stop manufacturing in the quantities that they do. This would mean less jobs.
I’d rather see a flat/fair tax that everyone would pay.
I can assure you that everyone is VERY aware of changes in the VAT rates. For example the shops here have been doing great business on the lines of "avoid the VAT rise on Jan 4th by buying now".
Yes the tax is put on at every stage of manufacturing, but the point is its put on every example of a particular commodity, so there is no competitive advantage/disadvantage. In fact it tends to highlight differences in production.
I don't understand your contention that VAT causes people to stop purchasing and companies will stop manufacturing in the quantities, which therefore means less jobs. I dont mean I dont understand the process, but how is that different from the effects of an income tax? With that, the prices remain the same but I've just got less money to buy with - so doesnt that have exactly the same effect?
How is VAT not a tax that everyone pays? Everytime you buy something, you pay the tax. So everyone who buys something, pays the tax. Therefore everyone pays.
Don't get me wrong, I don't like paying taxes any more than anyone else, and I understand that anytime the government takes money out of the economy they risk damaging it by the process you outline. However, my contention remains. IF there has to be a tax hike, I'd rather it was a VAT increase than an income tax rise.