I think this certainly belongs solely as a forum topic in the tea room, as it has hardly anything to do with engineering, but it is a question that vexes me slightly, as far as I can tell nobody seems to notice it.

My problem chiefly is with VAT, why does it exist, or why at least are it's flaws ignored?

Yes, it generates an awful lot of money, and I've argued with my mother over this as she is a book keeper and knows therefore more than I do about it. She defends it on the basis that it generates a lot of tax revenue, whereas I disagree on the principle of it, we existed for an awful long time without it and apparently did just fine, it was just called "income tax" in one form or another, fair enough I suppose.

Let me start from the beginning, so apparently it's an "output" tax, so anything you make as a business has to be taxed upon this, however the cost of which is simply handed on to the customer, so in practice it is a consumption tax, purely because the principle didn't seem to anticipate that businesses would do this?

Anyway, so you can reclaim this if it was goods that were "needed" by a business, under that title a lot can be justified, but only for businesses who are VAT registered (income of £70k+) can do it, you are not allowed to do it if you are a smaller business. (If you still believe that's a trivial amount, it isn't if at 20% of all expenditure was reclaimed, that's a large advantage they are getting and they simply hand the tax cost of the output onto the customer)

Trouble is, having worked at a few places, it is the length and breadth of the owners and managers of these blue chip businesses, go to, in order to justify anything to reclaim VAT on, including a large number of meals out, houses they personally buy, or other such outings or personal spending. Not really what i'd call a sundry of day to day running like most people would think. (Some of the items I've named such as housing is not VAT applicable, but they certainly were classed under business expenditure and wrongly so, but theres nothing we can do about that).

So I've hence come to term it a tax on the poor, simply because it would seem richer and more resourceful people can find ways of legally avoiding paying it. It seems to bolster large businesses whilst punishing smaller firms. And as a consumer, you have no choice but to pay it.

Anyone else feel the same here? It seems to be a law that was quietly passed under the carpet without any chance to review it. We might make a lot of money out of it, but i'd rather they just said it was a tax, and more importantly one that everybody paid on a level playing field rather than ifs and buts letting the rich off national responsibility.

Michael W

Edited By Michael Walters on 14/12/2016 14:52:21

Sorry Ian, I do mean well to make sure it remains a civil (and specific) debate rather than an ambiguous attack on ideology, I don't mean for that, it just seems like a very inconsistent law and one where it would deter many people from trying to start a business in the first place.

When it gets to large chains such as supermarkets, I could hardly imagine how huge an advantage this gives them and all the more money to do down smaller competition.(Some are so big, they could probably sell everything at a loss for a number of years and still remain afloat) 

So in the end it may actually damage social capitalism rather than promoting it. If you don't make a profit at your small sandwich shop for example, you're dead in the water.

Some people may argue that large amounts reclaimed from meals out could be justified if it related to what you do as a business, I agree with that however, this was done in the context of large engineering works, don't know about you but I don't consider this fits in the context of nuts and bolts.

Michael W

Edited By Michael Walters on 14/12/2016 15:13:44

Thanks for commenting Peter,

I do agree with you that you should take advantage of what you are entitled to, but what we are entitled to needs to be fair and justified and that is decided through debate in theory.

It matters not if what you are doing is technically legal, traditionally in the british law system we take a dim view of cheating the law on a technicality and hence a judges discretion still applies, regardless of whether or not what was done was technically legal.

Michael W

Thanks Muzzer,

This is a theoretical problem I've pondered for a very long time but not openly spoke about before this and for me it seems morally inconsistent as far as national obligations like taxes go, I would rather it was openly declared as a basic goods tax applied for everybody.

I'm personally appalled by the behaviour of our public officials when it comes to giving generous tax deals to large foreign firms to move here, when everybody else within the borders has no choice in the matter. Double standards comes to mind, rather than a cohesive and responsive society.

I personally would rather a political system similar to Switzerland where young people do national service and citizens can vote on a large number of laws effecting them, rather than a large body of individuals who may well be lying through their teeth to their own constituencies whilst personally favouring companies that nurture them and vote in their favour rather than the people they represent.

(Explaining the national service part a bit more; I think this is beneficial to young people who often lack the ideas of what they want to do at a young age, and therefore would be good for their self esteem, social skills and practical abilities that are easily transferable to a private employment environment. Theres a lot of roles people could fill so this wouldn't exclude disabled people or be totally military in nature of work.

I felt, as a mere 24 year old today, that when I left school after my A levels at 18, I was effectively "dumped" out the door and left to fend for my own two feet with qualifications that aren't worth much anymore. It should've made me very bitter about this country but despite that i'm still proud of it and think this is a good idea that could circumvent my bad experience that is probably a very common story today, many young feel left out of society). I think even if you made it voluntary, it would still be oversubscribed, that's how needed it is.

So I think therefore that a future shape of democracy should be one where we, the people, are allowed to vote on more matters, domestic matters, in a kind of (but not fully) "direct" democracy, like the old fashioned greeks and icelandics intended!

Everyone has got a point to make and this is just my own opinion.

Michael W

Edited By Michael Walters on 14/12/2016 16:07:03