The big VAT lie from the Telegraph.

In message , Bazzer Smith writes

I actually do think that greed is at the root of many problems. The financial year concept and the idea that one should always strive to outperform the previous year.

Greed makes me weep: particularly on TV when breathless CAs invite viewers to phone in the answer to a silly quiz so that ITV companies can trouser around GBP10M pa; or ads in which someone trills about how they sued their employers and ended up with a huge cheque (usually accompanied by a near subliminal shot of a fake cheque).

But you _HAVEN'T_ paid any VAT on that 6000. What are you going to do with it. If you spend it buying something you've got to pay vat on it. But you're saying the _FULL_ 6000 is theirs. And it is. Because you earned 1050 interest on the 17500. In your calculation, 15% of it went on paying the vat on it, the other 85% went on paying the vat that you would otherwise need to pay on the 6000.

And if you don't spend it we're back to where we started with people who don't spend all their money paying less VAT.

Course it does. If I spend the money straight away then the VAT man gets the money on day 1 and he then earns 6% on the 17.5k at the end of the year.

But If I keep the money for a year before I spend it I only pay him

17.5% of that 6% on the 17.5k as VAT (plus 17.5% of the 6% on the 100k and the original 17.5k)

And that's whats happening here. I'm earning interest on the 17500 VAT I will eventually have to pay but then keeping 85% of that interest.

Exactly the same happens with tax on account except that the percentages are 60/40 rather than about 85/15

No, you pay VAT when you spend your money. That's your argument, that the rich eventually spend all their (surplus) money on vatable items, not mine. Or are you arguing that you only pay VAT on earned income? I'm saying that if you can save temporarily before you spend then you can benefit from earning interest on that deferred VAT in exactly the same way as self employed can benefit from earning interest on the delayed payment of income tax.

Not at all. You have not proved me wrong and I'm not changing the proposition.

I'll accept that "over 1000" was wrong. It should have been "just under

1000." I don't accept that that is changing the proposition.

Tim.

Hmmm, I don't think I am right but I haven't worked out where I'm going wrong. I still don't see how you can earn 6% on the 100k without having to pay VAT on it eventually.

Tim.

You have to go into town for the job centre, it's in an old shop unit, IE too small for a burgertorium.

Plenty, + Kurger Bing, + KFC

The clientele is an education.

Derek

Signing as say James Gekko Follet would have given me a clue

Steve Terry

Sadly he seems to have run out of them.

That's not greed though that is getting what you are entitled to, usually compensation for your injuries/damages. How can that be greed? The greed in those cases is usually the employer skimping on costs of health and safty to get even bigger profits. It is right that such employers have to makea very hefty payout.

Thats simply a liek. Not only wil you find no fast food you won'tfind any shops of any description either.

WEll get one then

You have effectively.

Hint - work out how much interest you'd get if VAT didn't exist.

Then work how much interest you'd get if you paid VAT up front on the 117500 as I suggested.

And it would have been 7050 if VAT didn't exist. You lost 1050 in interest because of VAT.

What are you on about? If you earn 6% interest before spending the money then you'll pay 6% more VAT when you spend it, because you have 6% more money to spend. Net effect zero.

Of course it isn't! If you defer paying income tax then you are only earning interest on the deferred tax payment, NOT your entire earnings!!

By deferring paying VAT until you spend the money, you earn interest on the ENTIRE amount of your future spending, not just the future VAT due, and as such the proportion of your interest which is earned on the money which will eventually go to the VAT man matches the VAT rate. Making the effect of the delayed payment neutral.

Your comparison would only hold if you are not allowed to spend any of your earnings until the day you pay the income tax due on those earnings, and if income tax was flat rate.

In message , Andy Pandy writes

Apropos of owt, I went to Lidl today at Bordon in Hampshire. Our nearest depressed area with Zone B pricing.

They've adjusted their placard prices but have retained their prole pricing for hardware and clothing. That is: all prices are rounded up to end in 99p. GBP4.99, 5.99 and so on.

I can see that it would be implausible for the stamp duty to be suffered solely by the buyer, even though the buyer 'officially' pays it. But it is at least as implausible to believe that the seller is bearing the whole cost.

If it is accepted that the market price of something is the one at which supply and demand are balanced, then the truth must lie between the two extremes.

For the sake of argument, suppose that, in the absence of any stamp duty, and in a stable non-speculative market, the market price is £1000, i.e. supply and demand are balanced at that price.

Then, say, the government decides to introduce a levy of 10% 'stamp duty' on each buyer.

Does the headline price stay at £1000? I don't see how it can, because if it did a buyer would have to pay more (£1100) for the same thing, whilst the bargain from a seller's point of view is just as it was before. There would be fewer buyers than before but still the same number of sellers, and so the headline price would need be somewhere below £1000 in order to restore supply-demand balance.

OTOH, does the headline price fall to £909? (This would correspond to your suggestion that the buyer, in effect, suffers the whole duty.) Well, the same argument would apply in reverse: There would be too few sellers because some would be put off by the reduced proceeds, but the buyers would be unaffected. So the headline price would have to settle somewhere above £909, to attract more sellers.

So the price must settle somewhere between £909 and £1000, and the buyer and seller surely both pay about half the duty each. (I presume the argument could be extended more formally to show the headline price settling at the mean of 909 and 1000, though quite possibly not the arithmetic mean.)

Cliff

Nope, not in recent years anyway.

We're talking about the housing market here! It's hardly been "stable and non-speculative" in the last 8 years or so!

I think you're making the mistake that people view buying a house the same as buying anything else. Many (even most) people in the UK (at least until about 18 months ago or so) seem to believe that the more you spend on a house, the more money you will *make* rather than lose. That's why over the long term, house prices tend to rise in line with earnings rather than inflation.

So such people will tend to spend (or "invest") all they afford on a house, rather than asking themselves the usual questions when buying something, like "is it worth it?". So if an additional tax is introduced, buyers won't be able to afford to pay it because they are already spending all they can afford, so prices should drop by the total amount of the tax. Or by most of the total anyway, as some people do have some common sense :-)

In message , james writes

There's a piece in today's Daily Mail about the damage the hun-owned supermarkets are doing to the turnover of Tesco and others. Seems that Tesco and others, with their traditional banded margins, might have to abandon them. Not that Lidl/Aldi are worried because they've never bothered with price shadowing their rivals.

I always thought the fixed margin on foodstuffs policies of the huns would end in tears... of others.

Indeed; I bought some wooden taper-like firelighters and they were VAT-able.

But then with VAT on a simple human right like light or heat, I wasn't surprised.

I wonder how long it'll be before clean running water is deemed luxurious enough to attract the tax?

I knew that things were tough, but I didn't realise people were reduced to eating firelighters.

-- Richard

Hang on a moment. Your previous message claimed that it was 'just like' VAT. And 'always' to boot. We might be forgiven for thinking that you were asserting a general principle, rather than something specific to houses at a specific time!

That was the basis of my challenge to your assertion. But if you want to back-pedal to housing in particular, in the last 8 years or so in particular (but perhaps not, as you say below, in the last 18 months or so), then that's still worth being sceptical about.

(Just for the record, I did of course mean seller there.)

So what would you say about the situation in the last 18 months or so, as you put it? Are buyers now spending as little as possible? And does this mean that *they* are now suffering the entire burden of the duty?

I think this is the bit that I find difficult to swallow. The more I think about the more my brain hurts (though that may be a reflection on the size of my brain!).

You're right: I don't buy the argument that house ownership is special in some fundamental way. It might be relatively illiquid, and (relatively) dependent on credit, but the contention that people spend all they can afford on a house just doesn't seem to bear scrutiny, and yet it would have to be accepted absolutely in order to discard the principle that price varies to keep supply and demand in balance.

But people don't spend as much as they can possibly afford on housing, do they? I don't see people living on the breadline just after they have bought a house. And there are plenty of people around who did (and do) think that housing is too expensive and they would rather not buy. (Hell, there are even people who sold up and cashed in.) There is always some discretionary comfort you could give up in order to plough a bit more into housing.

Pretty much anyone would buy the house next door to them for the extra space if the price was low enough. The fact that they might also be able to buy it at the current asking price by impoverishing themselves, won't necessarily tempt them to do so at the higher price.

People (buyers and sellers) do, IMHO, balance their personal desire to own property with the sacrifices they would have to make elsewhere.

But that point is very relevant, surely. If your argument relies on people paying as much as they can absolutely possibly afford, then I'm not sure it'll do to say that those that don't aren't just as relevant to prices. They are part of the same market of the same houses. There are not houses for fools and other houses for those with common sense.

If stamp duty were removed then, without a change in 'tag' prices, the seller would be better off. You would clearly not disagree with that, since you think the seller is paying it *all*.

What I then find inconceivable is that more sellers at the margin wouldn't be tempted to sell in that scenario (balancing their love of their property against their desire for yacht, maybe!).

And then I can't see how the extra sellers wouldn't depress the tag price all little, thereby passing some of the benefit to the buyers. I don't really have any other notion of what 'price' *is* that would allow me to believe something else.

Cliff.