Hoping for a rise in VAT on items costing 500+ pounds RRP

[DistinguishedSocialCommenator]

I was positing on another thread and came up with a way we in England and Wales could raise billions in tax revenue every years that could fund a better NHS HC and educating people for better HS etc, etc and better schools.

I would propose (Someone will now actually use this idea)
Raise VAT to 30% on every item that costs more than 500 pounds RRP to 30% and use the money towards NHS and education re better health for all. (Most washing machines, driers, fridges, tv's, sofas, beds, clothing, food, and eating out cost m a lot less that 500. A bit like the new tax that was introduced many years ago on cars costing RRP 40k plus

We've boguth cars easily surpassing the 40k mark, though the extra road tax hurts, we have a choice if to buy or not or buy a cheaper brand new car or a used car. Therefore, IMO, the above is a good idea and we can be flexible with the exact figures of extra vAT kicks in at xxx - RRP and the new could be slightly higher or lower.

AIBU as this will help all of us.

Exactly right, loads of young people are desperate to be doctors and there really isn't a shortage of applicants. The bottle neck initially is in training them and then there are further issues with retention and working hours. Not to mention that the NHS can find that it is competing with the private sector in its efforts to get doctors to work more. Why would they do this for less for the NHS when they can get more money in the private sector?

As other posters have suggested, just paying doctors more isn't necessarily the answer. Doctors are human like everyone else and are often balancing their home commitments with their demanding work life. If they can get the lifestyle they want by working fewer hours and having more time with their kids then this is what they will often choose. I know at least two doctors who have made this choice in the past year and can afford skiing holidays and private school still. Paying them more wouldn't entice them to work more hours but would actually make them consider cutting down further.

Their main complaints aren't about how much they are paid but about working conditions and the stress that is placed on them. I have no doubt that money would be needed to resolve these issues but the only real solution is proper structural changes where the number of people training to be doctors increases and these recruits are used to help alleviate some of the pressure on the existing doctors.

Inequality in the Uk is better defined by assets than income so some sort of tax on the value of an individual’s total net assets would likely be the fairest way to increase taxation.

There are many reasons why a child may need to attend a private school.

How stupid. Inflation would rocket and you'd knacker the economy.

There are significant challenges facing our economy and way of living, including health and social care.

It's not going to be fixed by bunging 10% more tax on some items. It requires long term, cross party collaboration to bring about radical change.

Until our governments stop using the NHS and education as political points to be scored, they are never going to make any real progress.

Besides, who'd trust this bunch with any more money? Not me.

The £500 rule wouldn't target wealthier people. It would target anyone, rich or poor, who had to buy something that it is hard to buy for less than £500.
VAT isn't structured to be charged on the basis of price. It is structured to be paid on the basis of the categories that goods and services fall into.
The way to target wealthier people is to increase income tax, capital gains tax, etc.

another implication if VAT on high cost items rises, is potentially more transactions moving to the black market.

But agree with pp how is this not going to impact low earners?
If you're a low earner £500 will be a greater proportion of your wages, but that won't mean you never need anything costing over £500 🙄 and adding an extra 10% would surely have a bigger impact? Bikes, fridges wardrobes not outrageously luxurious items that could easily cost more than 500

That's going to kill most people's attempts to buy an air source heat pump. Or carry out any environmental improvements.Or buy a new boiler. Or perhaps you'd like people to just get cold.

I've got three major expenses this year -

1. replace our broken water pump - OP, would you like us to keep sharing bathwater or just not wash?
2. Replace my two remaining windows that are single glazed - or should I just keep wasting gas heating? Hardly environmentally helpful.
3. I've replaced our roof because it was way past end of life. Should I just have knocked the house down? Or lived with rain coming in?

And anyway, buying a cheaper, lower quality item is almost always a false economy. Better quality lasts longer.

Sorry OP, Possibly the silliest suggestion yet...

the idea is really good

You haven’t provided a single reason as to why it’s a good idea. As everyone has already pointed out, goods will be split into components for billing, small businesses will go bust creating unemployment and even more empty retail premises which reduces income for the freeholder and accelerate the death of the high street further, it will discourage quality manufacturing and encourage cheap imports that will have to be frequently replaced. What, specifically, is “really good” about it? You think it will generate more tax revenue but it’s not massively likely, especially when offset against unemployment in the manufacturing and retail sector. Morally why is it ok to tax a £400 piece of jewellery, a £50 pair of boxer shorts, a £480 belt, a £40 eyeshadow, a £300 birthday cake at 20%, but £500 washing machine, a £800 carpet, a £700 laptop at 30%? Which of those are the greater luxury? Which of those make a meaningful impact on people living a decent, comfortable life?

I would agree VAT needs a huge overhaul. I don’t agree with 20% on lots of things (hospitality where the VAT can’t be offset as the raw materials are zero rated) and the whole biscuit/cake millionaires shortbread debacle. I think it’s so high now it has a negative effect on retail, construction and manufacturing, but I’m sure someone cleverer than me knows the tipping point where so many business can’t survive the the negative impact negates the VAT collected. 20% added to everything you make on top of your wages and energy and premises and equipment costs is already huge. 30% on quite basic stuff like kitchen appliances and furniture is just stupid.

I came on to say 'what's an item?' but this puts the point so much better. Businesses would be marketing things like dining room suites as 6 separate chairs and a table, with all the associated extra paperwork, and then there would need to be legislation that clarified whether or not that was acceptable. CGT legislation already attempts to address this but it's not as simple as you might at first think.

This. With knobs on.

Reading all of the posts, some really good ones here

Yes, the new vAT will negatively impact small business.

Someone saying if the VAT went ahead on a higher cost on items 500+ and compaies would seell a 700 laptop for 500 and then batter for 200, good point but as we all know many laptops caost over 1k if not more as do mobile phones

To be clear, my proposals are not set in stone.

The new VAT could be set higher or lower than 30%
The 500 plus RRP could be raided

A forum member had a good idea here and I quoted them in an earlier post, "tax handbags" they said

Yes, possibly apply the tax to handbags, mobile phones, tv's, furniture but not carpets, holidays, car hire, and a few other items and some expenses, eg, food but not clothing, the service sector like car repairs, getting bolier, roof fixed, new fence, drive etc

This will raise billions but I fear the prized clowns from both main parties will quite quickly redirect this extra income or cut back on what was targeted earlier

We don't want Labour back in as trust me if you've got a bit of savings, own your own home and a private pension, you will be seriously hammered.

Both parties will say anything to get to number 10 but as soon as they are in there, its everyone for themselves

I believe what politicians say just as much as I trust a serial cheat

VAT is not a luxury tax.

It is the EU's general sales tax, which we adopted when we joined (all members have to) and at that point we also had to scrap all previous sales taxes (including the old luxury tax)

Now that we have left the EU, we can of course set our own sales taxes, and if we want to re-introduce a luxury tax then we are free to do so

But what would be the impact on the wider economy?

Might it be better to put it on certain classes of items (say all jewellery and make up) rather than across any item based on its cost?

Another badly thought leftist idea. Make the lowest paid workers suffer more.

If the extra revenue (effectively 10%, assuming the other 20% is used as per current arrangements) is to be used solely to dismantle the NHS with a clear target of, say, 5 years, I'm all for it,

It doesn't matter how much more money we pour into the NHS, it will never improve under the current set-up. It is a wasteful organisation, only being kept in place because no government will ever be brave enough to get rid of it and set up a sustainable alternative solution. No idea what the alternative would be.

I thought half term was next week

Are you perchance a skilled economist, OP? No, I thought not.🤪

No it wasn't. It's never been a "luxury" tax. It's a sales tax.

Given the way the NHS and education are funded in Wales, it won’t work.

A far better way to raise more VAT without changing the system too much is to reduce the level which you need to register - or bring in a tiered system for businesses similar to the stamp duty.

too many businesses are held back by the cliff edge at 85k - because to make it worthwhile going past it you need to turnover around 105k.

I one simple swoop you could improve productivity, increase tax take - 1000s of businesses trade sub vat that could easily trade more but restricted by the cliff edge that is the current system

OP could be Liz Truss she also had some "brilliant " ideas.

That's what they always say but it's not true, it's just an excuse to cut funding. Of course efficiency can always be improved but we have one of the most cost efficient health care systems in the world. Throwing money at the NHS absolutely WILL solve the problem as proven by the last Labour government.

You can make voluntary contributions to HMRC if you think that would 'help all of us'.

Where are you getting the bloated nhs spending from?? It’s just not true

https://www.health.org.uk/news-and-comment/charts-and-infographics/how-does-uk-health-spending-compare-across-europe-over-the-past-decade