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What ever happened to VAT.
Read more about: Taxation 
With all the talk of Stamp duty I amazed with how little coverage the issue of Value Added Tax gets. The only person I heard go on about it is Vincent Browne. None of the parties are going on about even though VAT is more regressive and hits people harder then stamp duty (21% of most stuff you buy for life). It is the ultimate stealth tax that angered people during the time of the Eddie Hobbs show. But now all is quiet. How come? The main argument against it is that people will not benefit from it as the retailers will soak up the difference. But is that not the same government who said that that would not happen with the groceries order? Which although slow did eventually result in price drops. I have talked about it here before
A reasonable point I seem to recall David McWilliams talking a lot about how we’ve transferred the taxation base from taxing work and labour to taxing consumption, and VAT is a main arm of that. We could look at reducing VAT to 20% but only if we have more competition in the services sector. Or we could operate a type of VAT quota which would facility those on lower incomes most as the VAT hit on food and so on hurts them disproportionately more.
An adjustment to what items get the top rate, what get the middle and what get the low/zero rates is long overdue. Dropping VAT by even one percent, though, would cost a lot of money.
Income Tax is a tax on work; it inhibits extra effort; it takes from the productive and spends it on the unproductive.
It is a lazy tax.
It should be replaced by progressive Consumption Taxes.
VAT is a tax on consumption. But it also a lazy tax and it is inflationary in its operation, adding tax as every new invoice is created.
A graded Sales Tax would take proportionately from those who can afford to purchase goods and services in the market place.
Essential foodstuffs; clothing and necessities would be zero-rated; luxury goods would be taxed according to the level of necessity inherent in the particular article or service.
For example, milk would be zero-rated; caviar would attract a high rate of tax, say 1000%.
A basic bicycle might be zero rated; a Ferrari might attract taxation at 3000%.
The exact rates would need serious consideration to achieve the necessary balance, but it would confer choice on the individual, which is obscured under the present system.
It would also bring the “Black Economy” under the umbrella of Total Taxation.
It would be beneficial in recognising effort. The more one earned; the more choice one created. Savings would increase as citizens saved to acquire higher priced goods and services.
It would need to be accompanied by a complete overhaul of taxing property.
Personal Private Property (PPP) would be valued on the basis of the Insured Reinstatement Value (IRV). Any difference in the selling price might be subjected to CGT.
Stamp duty,another lazy tax, would be abolished in its entirety.
The introduction of a Distributed Profits Tax (DPT) would complete the radical overhaul of the Irish Taxation System that would replace a discredited system, albeit a common one throughout the EU and the USA.
To bridge the loss of Revenue during the changeover, Government would issue a high-interest (say, 2 basis points above DIBOR)long-dated (say 30 years) Bond of, say, €100 billion to be drawn down as required to fund essential services.
None of the political parties have ever attempted to attack the inefficient systems in operation here since 1918.
My own fear is that the reductions in stamp duty and income tax will be financed by increases in VAT. Where else will the financing come from?
From a reduction in Public Spending; in the size of our bloated Government – and its attendant Civil Service – and their collective, inflation-proof, pensions – not available to the general workforce of Ireland.
From a switch from a tax on income and prosperity and effort, to a tax on consumption – where the workers of Ireland can exercise choice and not have to pay €450 a week for Bertie Ahern’s make-up and hair-cuts; his gridlock-proof helicopter; his Gulf Stream jet from Baldonnel; his globe-trotting expenses for himself and his mistresses.
STOP THE WASTE AND THE BIGGEST WASTE OF ALL IS OUR GOVERNMENT AND ITS CIVIL SERVICE.