VAT

'Call me Dave' David Cameron 'suggested' (09.01.2011) that the VAT rise is likely to be permanent. Of course it will be (he always manages to wear such a transparent look of 'pain' and 'anguish' DA).  Who could ever imagine anything else? The last government reduced VAT temporarily, but the present one will want to continue to 'earn' its money. When the alleged (unverifiable) deficit 'that has been inherited from the last government' is 'brought under control' (that by definition will never happen because that could never be allowed), the grip will continue to tighten. To extract ever more, forever. Once ground has been 'earned' it will never be given up.

Labour (as a Label) would

"tax the rich until the pips squeak"

The quote was denied by Healey.

Inflation can never be reduced and must always rise: it's in the nature of the beast. (The parasite is cynically 'clever' and the transparent cleverness is very... transparent.) It's the antithesis of the Apollo fiction where nobody wants to believe, yet (nearly) everybody does.

A sickening paradox

• Create the problem: deficit

• Provide the solution: cuts, cuts, cuts

• Less and less out and more and more in

Crude, hopelessly inelegant,
but completely effective

1984

Animal Farm - A Fairy Story

Waking up, yet? George Orwell (Eric Blair) did. These visionary 'stories' are more popular today than ever. The ensnarement of the next generation [and the one before (yesterday) and after (today) and the next (tomorrow)] is still being played out.

Wake up!

Wake up!

Wake up!

The rise of 17.5% to 20% is far from a trivial 'just' 2.5% increase: this hike is actually 14.3% (2.5/17.5 = 14.3). Or:

17.5% + (14.3/100 x 17.5) =

20.0%

The (upward) movement in rate is highly cynical as always suggesting that the rise in VAT (value added tax) actually enhances value. Something that costs more must represent better quality/value. Mustn't it? It's one of the oldest 'tricks' around to dupe the unwary. In some instances this may be true, but in many others the trick is 'played' and the best place to hide a tree is still...

in a forest

The term should be something like value-added tax at the very least as opposed to value added-tax. The term value never belongs with tax. The association crudely attempts to create a psychological 'belief' by linking the two. A tax is a tax and to suggest VAT is the least painful is staggering deceit. The extent of 'spin' knows no boundary. The term carries the implication that anything of perceived value is worth the extra tax. Anything is only 'worth' what someone is prepared to pay. The artificial raising of value is similar in principle to the auction price elevation technique of 'bidding against self' and using an accomplice or 'co-conspirator'. The only obvious short-term loser would be the bidder, but in the (slightly) longer-term and then forever onwards, the 'value' has been massaged upwards. Incredibly crude, but it works. The gullible will always pay 'the going rate' in order to possess something perceived as valuable. Or as a trading practice, it enables profiteering. But by any name, a tax is a tax is a tax...

Another side to this is that those forced to pay for the 'value' forced upon them, truly have no choice but to accept the 'value'. Rail fares are always an easy target by virtue of trains being a necessity to travel. The commuter who must use trains at the created so-called 'peak' hours is just a victim of profiteering through parasitical feeding off the trapped victim. Victims will pay since they need to work. The parasite debt-based system demands that everyone works. The growth of the individual and perceived wealth hangs simply on funding it. The bigger house or car regardless of need is the status symbol some people find irresistable to demonstrate how well they are doing in life. How successful they imagine themselves to be. The more debt that can be managed (afforded) equates to more success. It's really perverted logic as any debt implies a loser rather than a winner. But conditioning 'spins' the meaning and belief around.

The consumer is being targeted (and skewered, shafted...) again to 'earn' the government the means to reduce 'the deficit inherited from the last government'. The term 'earn' is euphemistic for 'extort', but without menaces. If you don't pay then go without. Maybe your job.

The extent of 'spin' knows no boundary.

• VAT: rate will rise from 17.5% to 20% from January 4, 2011. Effect: negative

• Personal income tax allowance: to be increased by £1,000 in April to £7,475 - worth £170 a year to basic rate taxpayers. This is roughly £3 a week. Inflation will easily erode this and probably already has. Effect: negative

• Consider balancing a 2.5% increase in VAT against the reduction in personal tax (for those that pay it). An item ‘valued’ at £1000 will attract VAT @ 20% = £200 from £175 (17.5%). Cost of a £1000 item will actually cost £1200 against £1175. An additional £25. This may not sound a huge amount, but the tax is still an additional £200 of already taxed personal income. Effect: negative.

• The cost of a new car (say £15,000) will cost an additional £375 (= £3000 - £2625). About 120% more than the saving in personal tax for the basic rate taxpayer. Effect: negative.

• VAT is applied at the higher rate of 20% on petrol from 4th January 2011, but this is only after the fuel duty rise on the 1st January 2011. This increases the VAT yield. It's cynically separating the two rises with just two days in between, but the order of increases is critical to maximise the tax revenue. This defines fuel duty as applying to the petrol before any tax.
  

• Some consumers (apparently and allegedly) regard the 2.5% increase in VAT as nothing really very much. That's the idea. The expectation of NOT doing the maths. If true, of course.

• It is anticipated that 880,000 of the lowest-paid will be taken out of income tax altogether, but instead must pay an addition premium for a perceived additional value. For the time being food and newspapers (the method of communicating the propaganda-inspired 'spin') are amongst the zero-rated supplies.

• Council tax: could be frozen for one year from April 2011 in England, but extra funds will only be offered to councils which keep their own costs down. Effectively it could be interpreted as a bribe to 'encourage' conformity. Allegedly, worth about £35 per household (no indication of where such a figure comes from and is totally unverifiable). Should Council tax be regarded as a tax on some sort of added value? DA

Freezing does not mean

suspending in hibernation

• When (and if) any freezing occurs, it prepares for a future thaw when greater rates are applied to recover everything apparently 'given back'.  For example, say council tax for 2010 had a rate of £1000, then the tax for 2011 would 'normally' be expected as £1050 (5% inflation). But freezing the tax at £1000 enables removal of services (probably never to be restored) and the expectation for 2012 at continued inflation of 5% might then be £1050. However, the 'frozen' £1050 would jump to at least £1050 + £52.5 (5% + 5%) = £1102.5 to recapture the 2011 'lost' revenue in 2012 that would include a rise for 2012. Restoring the charge for 2012 is more likely to be at a rate of something, say, approaching £1200. An 'invisibly', and opportunistically, much higher rate: £1200 instead of £1102.5. 'Frozen' for one year would translate to £1000 + 0% (2011) -> £1000 + £200 = 20% (2012). So, instead of an overall 5% that includes a 'frozen' 5% over 1 year the actual jump could be 20% over the same period. Beware = be aware: DA

• The expectation here is a very selective system and consequently very regional. The more the decline in an area, the less the 'government' subsidy (taxpayer support). This relocates wealth. A 'contribution' 'taken' from taxpayers in one area and centralised at the exchequer then 'given' (disbursed) to another. Governments always attempt to capitalise on the perceived advantages, but in the process hide the true rise.

With interest

• Capital Gains Tax: to rise from 18% to 28% from midnight for higher rate taxpayers. The "entrepreneurs relief" rate of 10% on the first £2m of gains will be extended to the first £5m. Enabling the wealthy to get richer? And does this (yet) include MPs? DA

• A 50p a month "landline tax" to fund the rollout of fast broadband will be scrapped. But. The government will support private investment, partly funded by the digital switchover under-spend within the TV licence fee. (Eh? How is an alleged under-spend verified?) Can the BBC be independent of government when it/they feed each other with money? DA

• The balance of spending cuts to tax rises would be 77% to 23%. (Eh? DA)

Be mindful of a huge unit cost before VAT is added and the total will be enormous. Maybe

 £2billion

Enough reason to initially forget to add the VAT, raise the %age rate and only then remember the VAT that was forgotten.