Pyramid Comment

This journal takes an alternative view on current affairs and other subjects. The approach is likely to be contentious and is arguably speculative. The content of any article is also a reminder of the status of those affairs at that date. All comments have been disabled. Any and all unsolicited or unauthorised links are absolutely disavowed.

Sunday, July 04, 2010

Coalition Budget

It's peculiar to hear and see Tory Chancellor of the Exchequer George Osborne presenting a budget ostensibly orchestrated by Chief Secretary to the Treasury: Lib Dem Danny Alexander. But this is the politics of misdirection and spin.

Considering just the single issue of the proposed VAT increase to 20% (from 17.5%): this is patronisingly regarded as saving the country £billions. It is actually all consumers (an electorate of all persuations) subsidising the deficit by paying those £billions in already taxed-income. The nightmare created by the now defunct Labour government of the last 13 years [that now vies and squabbles for the top dog (leadership) position].


The difference in the actual cost of a £20,000 vehicle caused by the (trivial) VAT increase from 17.5% = £3500 to 20% = £4000 equates to an additional £500. Remember that only recently the VAT levy was 'just' 15%, so the relatively recent jump is actually from 15% -> 20% or in the example £3000 -> £4000. An additional £1000 is certainly not trivial for any genuine 'ordinary man'. This ignores the increased new-car (purchase) tax and any interest as a result of the increased cost. The £20,000 vehicle costs escalate substantially. This may be trivial, but must depend on an appreciation of value.

To peddle this hike as fair is very misleading (illusory) and cynical. A similar item bought by a rich or poor person attracts identical VAT. To the wealthy individual, such a tax is more affordable. It has always been an unfair tax, both in terms of the description of value and what it actually represents. An item has value by definition if it is something desired. That (should be) a very subjective evaluation.

  • Even more cynical: food and children's clothes are by such a definition of no value, since tax has not been added: