Be Excellent To Each Other

So, VAT is going down to 15%. As a consumer, this sounds like a good thing. I know some of you guys run your own businesses. How's it going to affect you? Good, Bad, no difference?

Won't at all, shops won't reduce prices really because it's too small a cut to make a pounds difference to virtually anything.

It'd be £3 on an Xbox 360...

It's a worthless piece of headline grabbing flailing where the costs of repricing will wipe out savings and the cost of re-writing badly written hardcoded systems for a temporary change will be crippling.

IT programmers in "Wrecking the economy worse than stockbrokers, lazy and overpaid" shocker. More at 11.

why would a programmer hardcode the VAT level? How much memory would that save realistically?

I thought someone on here mentioned recently that it's likely that the value won't be hardcoded?

Anyway - if this reduction *is* passed through, it'll be an expensive waste of time anyway. As someone on Today pointed out this morning: "I'll go out and buy a bottle of wine to celebrate saving 15p on the price of a bottle of wine"

We can all look forward to big ol' tax rises to pay for what Today reckoned will be a 40bn a year borrowing problem as a result of all this, too. Nick Robinson noted that the new 45p tax rate for those over 150k (which will only raise £2bn a year) appears to be a sop before they have to bill the rest of us - either through tax hikes or another increase in NI. The government's not even denying that they're going to fuck us all in the ass down the road to pay for this either.

As an aside - I was a bit freaked when I heard on the news last night that tax was going up for "top earners" - I thought they meant those on the top rate band.... :-) Phew.

Um... in the internal systems I've written for our company, the VAT is hardcoded at 17.5%.

Would take me about two minutes to change it, though.

We store vat rates in a file that is editable by our customers. They just need to define a new vat rate, and tell the appropriate sales headings to use that value instead of the old one.

a 10-15 minute job.

Malc

According to the Telegraph bloke on BBC Breakfast this mornign, the 45p rate will come in after the next election, giving them plenty of time to stash the money elsewhere. Not sure how it affects me - I put an invoice in on Friday at 17.5%, I wonder if I could get it replaced at the new rate... my client would be happy.

The only place you'll see a difference is when buying something where the price is quoted ex-vat, otherwise they'll just absorb the difference. So cars, then.

Ah yes, makes sense:

"Hello Old Labour voters! Still pissed off about the Iraq War, Jacqui Smith, and the government in general? Don't vote Tory - they want to oppose a tax rise for the evil wealthy toffs."

Mehhh. Couldn't have put it better myself... are people really that gullible?

As for VAT, yeah, what Dudley said above. Pretty much sums it up for me also.

Cavey

Indeed.

An entirely symbolic, give the toffs a shoeing, make yourself feel better tax rise that will only raise 2bn a year. At most, that is - seeing as people with that income level are more than capable of employing accoutants to minimise their tax exposure.

Of course the rest of us will have to absorb something to raise the other 38bn a year. Don't expect any of this to result in the poorest *not* being taxed at a higher percentage of income than the wealthy, either. It's an awful, cynical manipulation of the voters.

And yet, I still can't bring myself to vote Tory.

Our products has user-definable VAT levels - we have to, as we have some US clients and their sales tax system is mental. I bet there are some bodged together systems somewhere with wedged in everywhere.

And I agree that's it's fairly token - someone on 250k is going to pay an extra 5k a year - that's not going to be hugely noticeable either for them or for the government.

A quick check through our systems and we've got a bit of hard coding there. Nothing it won't take a few minutes to fix.

The 45p thing is a joke anyway, there's a reason we don't cripplingly tax people on that level.

1) They find it easier to dodge tax anyway

2) It's oh so much easier for them to move abroad.

And we're giving them fantastic reasons to do so.

An extra 5p in the pound is hardly crippling to someone on 150k plus. It moves their overall tax burden slightly nearer to the percentage paid by poor people, but it's still not the same.

It's also not that easy for people to move abroad. Most lawyers, for instance, can't easily do so and won't. But yes, as I've already said, it *is* easier for the more wealthy to mitigate their tax liability, as they can afford accountants.

I'd be happy to pay 45p in the pound once I'm at 150k a year, to be honest. Provided that money went on tax breaks for the poor.

And when shopping in Staples.

The "oh we'll just move abroad" thing is utter bollocks. Most of those who complain about it spend time in and out of the country anyway for tax reasons.

The point about being most able to reduce their tax is right though.

Unless I've missed something, surely the more you earn the higher your tax burden percentage, assuming you actually pay it?

There are already multiple levels of VAT (17.5%, 0% and is there a 4% one, or have I made that up?). Hardcoding anything that is a simple number or numbers, and that can be changed on a whim outside your control, is a bit daft.

Mostly because as an exercise in laziness it's counter-productive - just think how much panic this is generating this morning.

My shopping habits will change not one iota, even if prices do change. The only difference I expect to see is on petrol, of which I'll be buying exactly the same amount.

Same as with the FT's continued chorus of "make it easier for companies or they'll all leave the UK". Only one has left recently, and moved to Ireland. For most, the cost of relocation will outweigh any tax saving, and all the big ones (e.g. Tesco) are already using offshore vehicles to cut their tax liability. And the survey responses to teh FT form these companies that the FT is using as evidence are all "mights" not "wills".

And there will always be a country with lower tax than yours (well, except for the one at the bottom). So why isn't everyone in the world moving to, I don't know, Micronesia, or wherever it is that has the lowest rates of tax?

I imagine most people on 150k salaries are partners and directors of companies, high level professionals like lawyers and doctors and top civil servants, and some self-employed, small business owners and free lance consultancy type people. They aren't particularly footloose. It's the multi-millionaires who can move where ever they want, and are they ones who can get around the tax easily, as all the wealth is in funds and stocks and options and in safety deposit boxes in Qatar and Euro Reversable Trouser Bonds about the place.

Income Tax rate is higher on highest earnings, but NI is actually regressive, so it can mess things up. And that assumes that high earners get paid in normal money, and not in lower rated things like options and shares and super low interest loans and so on.

I suspect the answer revolves around fixed tax amount products like Petrol and Alcohol where the poor spend a larger proportion on them and they carry massive tax rates if you work it out in %.

Of course the alc's their own bloody fault but that's a separate discussion.

OVERALL tax burden, dude. Take into account all the other taxes, too, which aren't income dependent - VAT, fuel duty, road tax etc etc. I had a hard time getting my head round it, but all the clever people say it's true.

Quite. I can't, for example, easily fuck off and be a lawyer in Canada, say, as I'd have to go back to law school for a year to qualify to practise as a lawyer there.

I've looked into this, of course. I wanted to move there, save up some money and then be a bush pilot.

Equally the poor spend a higher proportion of their income on zero rate food too...

Depends on the programmer, really. Any one worth his/her salt won't have hardcoded it, but there's a lot of numpties out there with jobs that they don't really deserve

Indeed - but the "luxury" items will be a bigger percentage of their income than for a wealthy person. E.g. the VAT on an iPod will be a bigger percentage of a cleaner's 15k salary income than of a lawyer's 100k. Of course the wealthy may buy more VATable goods, but not *that* much more that it makes a difference to the proportions, apparently.

Most reasonable programmers will either have it in a database as a true variable or have it defined in some header file somewhere, meaning it's a few minutes to fix. On the other hand there'll be thousands of Excel spreadsheets knocked up by managers and business analysts with a 1.175 in a cell value somewhere, and they won't get updated, and people will get stuff wrong.

Checked my code. There's one bit of invoice generation code where the VAT is calculated for all invoices for all our products/services, so I have to change one value on one line of the code and then change the next line where the display code shows the VAT rate.

So, ten seconds work, there.

Nowhere in reporting or anything does it assume a VAT rate or anything like that.

That seems to imply that poor people spend a higher percentage of their income on luxury items than rich people, which is clearly tosh, surely?

You've got flat-rated taxes (mainly VAT and other duties), which one would most likely expect to be an equitable percentage of both types of people's incomes, and you've got variable rated taxes (income tax, stamp duty), which are a higher percentage for higher earners.

I can't see any way in which the scales tip the other way. Except possibly if the rich person is only spending like a poor person and saving 90% of their salary.

Real life is never that simple.

I don't think it is tosh, no.

Take a family on 20k and a family on 150k. They both need to buy a microwave, a washing machine, a television, a car etc. Which family is spending a higher proportion of their salary on those "basic" VATable items?



Only if the higher income people bought much more of them - they'd have to buy seven and a half times more on VATable items than someone on 20k a year. And apparently they don't - it's not me saying this, but the economist sorts. The radio told me. And it makes sense, doesn't it? Seven and a half times more?


That's me, that is.

But a rich family would be way more likely to buy a super flash metal finish fridge with ice dispenser and internet access, whereas a poor family would by a cheapo white one from curry's. And the richers would be more likely change it if it goes out of fashion (well, the wealthy people I've seen, anyway, they piss money away like crazy on frippery) or their needs change, rather than keeping it for a while and 'making do'

Would that affect things at all?

It would, but only if they spent seven and a half times more on those things than the "poor" people on 20k a year.

I still can't quite get my head round that happening.

Yes -- but not a sevenfold increase, I think. I agree with Mr Chris here.

I'm surprised there hasn't been a Fallout 3 targeting system based gag in here yet.

That's because it's called VATS and not VAT. God, you're an idiot.

They'd also replace all those items significantly more often. Still - would it make enough of a difference to outweigh paying double the income tax, given that you can't really spend more than you earn.

Taking tax free allowance into account, someone on £50k pays roughly double the % of income tax of someone on £20k. Are you telling me that the tax paid on buying new fridges and petrol cancels that out? Because you're wrong if you are.

Look at it this way - it's physically impossible to pay more tax than you pay in income tax (assuming you don't die etc), because it's both the highest rate, and because you can't spend more than you earn.Therefore, the highest factor affecting your tax burden MUST be income tax. So if you're paying twice the percentage in income tax that someone else is, you have a higher percentage tax burden.

When VAT went from 15% to 17.5% we ended up with games costing something like £3.04 and £10.06, which actually hastened the rise to £3.99 and £10.99/£15.99 pricepoints for the 8 bits.

So lord knows what fiddling with VAT will do this time. People might reduce their prices slightly but it's unlikely because you'll end up with odd numbers (non retail friendly stuff like £9.97 rather than £9.99). So I can only assume this is to help retailers profits not the consumers. Of course, when VAT goes up again they'll pull the same trick as with the 8 bit games.

Not necessarily - a £1000 SMEG fridge is probably likely to last a lot longer than a cheapy fridge from Curry's for £250, making the burden on the lower income family higher still. It's like the Vimes Boots Theory of Socio-Economic unfairness, remember? A rich person will be able to buy a AM$100 pair of boots that'll last ten years, but the poor person has to buy a new pair of AM$25 dollar boots every year.



Again - it's not me. It's economists and the Treasury. I'm sure they've been doing their sums.



Only if it's over 50%, of course. Which it isn't.

No - because if you've been taxed 40% on £100k, say, you're left with £60k. In order for tax paid on that to be greater than the initial income tax paid, you'd have to pay 66% tax on what you spend that on - not quite sure how you're going to manage that.

It's quite simple. Because all the other tax rates are lower than income tax, you can't possibly spend enough to raise the amount of tax you're paying above what you've already paid in income tax (especially as the income tax is paid on the full 100k, all other taxes are only payable on what you spend of the remaining 60k).

Tell that to the Treasury, then, because they think you're wrong.

I'd do a worked example but I'm moderately busy today. Maybe later.

Unfortunately the treasury aren't here. My maths makes sense though, right?

Council Tax too. There is no way a guy on 150k pays 7.5 times the council tax of someone on 20k. In my local area, the top band is less than three times the bottom - someone living in a 10 bedroom mansion is only paying 3 times more than someone living in a bedsit, and about twice that of someone living in a two bed semi.

No, I don't think so.

You're not comparing the same things between the 100k person and the 20k person - I'll do an example later.

Person on £100k who spends fuck all:

Income Tax paid = (65k * .4)+(35k * .2) = £33k. Which is 33%.
VAT paid = Nothing.

Person on £20k who spends every single penny on goods charged at 17.5% VAT:

Income Tax paid = (20k * .2) = £4k. Which is obviously 20%
VAT paid = 16k * .175 = £2.8k.
Total is 6.8k, which is 29%.

And that's taking the totally ludicrous extreme that the poorer person spends every penny they have on the highest possible tax-rated goods, and the richer person doesn't spend anything whatsoever.

At first glance, your examples seem completely irrelevant. Can anyone else confirm this?

You're irrelevant.