General News Discussion

[lost]

Oil and gas industry works on an average 6.2% profit margin. In fact most of the commodity based industries fall into losses when the economic cycle bottoms. You’ve have all these food producers, miners, steel and energy companies going to wall. Infact utilities are only running on 8%. so would probably be fucked too. The upturn then with so few companies remaining would create prices and shortages that would make the Ukrane famine under communism look like a weight watchers convention. Not one of your better ideas.

Edited December 6, 2012 by lost

[eFestivals]

but there are plenty of businesses which run at a profit margin of less than 10% and markets where single figure margins are the norm

I'm no lover of capitalism - but I'm not sure that a turnover tax would necessarily make it work any better

I recently got asked by my bank what was my company's profit projection? I said it depends how much I pay myself. True story.

While that might not apply to all those you're concerned about, it does show just how easy it is to abuse the current system by moving or re-labelling what is profit. The tax system has supposedly designed rules so it doesn't have to chase around after the money but they don't work and will never work.

You don't have to chase around after turnover. It's transparent. That is it's massive advantage.

OK, maybe 2% is too high. Perhaps just 1%, introduced in 0.1% increments every two years. Any normal business which cannot plan for and bear that cost over that timeframe is not going to be any sustainable business anyway, so there's not really any need to worry about them.

[eFestivals]

Oil and gas industry works on an average 6.2% profit margin. In fact most of the commodity based industries fall into losses when the economic cycle bottoms. You’ve have all these food producers, miners, steel and energy companies going to wall. Infact utilities are only running on 8%. so would probably be fucked too. The upturn then with so few companies remaining would create prices and shortages that would make the Ukrane famine under communism look like a weight watchers convention. Not one of your better ideas.

I've seen your post after I'd made another post, where I said - OK, 1%. That would financially impact on none of those at all (because it's offset against corp tax).

What i'm surprised no one has thought of to attack the idea is that, to work properly, it would really need businesses to register with the govt before they could trade - which I can't ever see being accepted thru govt (because of who is in govt, of any party). That's the or of idea which goes down badly in the UK, while being a standard thing in many other 'free' countries.

[philipsteak]

Love this

http://www.bbc.co.uk...d-asia-20614593

[grumpyhack]

Back to tax for a moment (though I did enjoy the dog driving school). Starbucks may have offered to cough up possibly because of the threat of a boycott but Google is standing firm. Maybe that's because it enjoys a pretty near monopoly. So the bigger you are maybe the easier it is to tell governments to **** off.

[abdoujaparov]

I've seen your post after I'd made another post, where I said - OK, 1%. That would financially impact on none of those at all (because it's offset against corp tax).

What i'm surprised no one has thought of to attack the idea is that, to work properly, it would really need businesses to register with the govt before they could trade - which I can't ever see being accepted thru govt (because of who is in govt, of any party). That's the or of idea which goes down badly in the UK, while being a standard thing in many other 'free' countries.

[abdoujaparov]

Basically, its the sort of bad idea the ultra lefties always come up with...

[grumpyhack]

VAT is surely, effectively a tax on the poor. Businesses registered for VAT can reclaim the VAT they pay out and collect and pay over the VAT they charge others. So, effectively they are no more than tax collectors. A lot of wealther people either run businesses or can buy their goods through a business so they skip VAT. The only people who can't reclaim VAT are those who are not registered - i.e.Poor Joe Public.

[abdoujaparov]

VAT is surely, effectively a tax on the poor. Businesses registered for VAT can reclaim the VAT they pay out and collect and pay over the VAT they charge others. So, effectively they are no more than tax collectors. A lot of wealther people either run businesses or can buy their goods through a business so they skip VAT. The only people who can't reclaim VAT are those who are not registered - i.e.Poor Joe Public.

[eFestivals]

Back to tax for a moment (though I did enjoy the dog driving school). Starbucks may have offered to cough up possibly because of the threat of a boycott but Google is standing firm. Maybe that's because it enjoys a pretty near monopoly. So the bigger you are maybe the easier it is to tell governments to **** off.

set your own tax rate - isn't it great the system we have.

[eFestivals]

I think there are two fundamental problems with the idea. The first is that a tax on turnover will ultimately become a tax on customers.

no more than corp tax is. It is not an extra cost to businesses, so it's not an extra cost to customers.

Companies will seek to pass on the cost of the turnover tax to their customers, so consumer prices will go up. This makes the tax ultimately very regressive: it will impact most on those who spend most as a proportion of their income on consumption, which happens to be those on the lowest incomes. In blunt terms, it would make the poor poorer by making them pay more for the goods and services they need.

seeing as we have sucessive govts that believe that VAT is a non-regressive tax and better than income taxes, you words don't fit the reality.

It's also not clear how a turnover tax would be different to VAT. If I trade in VATable goods or services, I pay VAT to HMRC as a percentage of my turnover. Corporate VAT avoidance runs at between 14 and 17%

No you don't do that with VAT. You pay VAT on sales minus purchases. You do not pay VAT as a percentage of your turnover (unless on the mickey-mouse VAT scheme where you've chosen to pay more vat than you need to).

No wonder you're seeing my idea as so negative, you're not understanding it at all 9else you'd not have mentioned vat).

[eFestivals]

Any such tax on revenue would, as always, hit the smaller trader much harder than the huge corporation...

only if the small trader is being more shit at business than any huge corporation - the facts (in the tax system, anyway) show different to what you say.

In theory it would raise more tax... But it is true to say higher tax rates don't always a higher return... Specially when you are sending small traders to the wall...

It would stop corp-tax avoidance, it would drive (only!!!) tax-payer subsidised businesses to the wall. Others would pick up that business - and the market would operate more efficiently (so says capitalist theory!!!).

In economic terms it's 100% effect-neutral. In market terms it creates a more efficient and less warped free market.

But everyone looks at something like this and says "I can see where it costs me" and then stops thinking altogether - because they are being too narrow minded to look at the big picture where any extra costs those costs come more-than back to them.

Edited December 7, 2012 by eFestivals

[eFestivals]

exactly my point - VAT is a regressive tax

and we have govts who love VAT, no matter what you call it.

The simple fact is that if a turnover tax stops tax cheating the taxpayer (everyone!) wins - full stop!!!!

Every other 'bad' effect is lesser than that win.

[lost]

seeing as we have sucessive govts that believe that VAT is a non-regressive tax and better than income taxes, you words don't fit the reality.

[eFestivals]

All regressive means is that the tax rate decreases as the amount subject to taxation increases e.g. fuel duty, beer duty, congestion charge etc.. A government can still believe its regressive and the best fit for the form of taxation they are looking for.

'regressive' means what anyone decides it means towards the tax system. It's as meaningful as Cleggy saying that any changes will be 'fair'.

Yep, they certainly do think VAT is the best fit taxation - the best fit to make the poor poorer and the rich richer. That's precisely why Thatcher more than doubled it. But anyway.

I've not tried to claim what i've suggested is perfect, and there are places where they'll be bad impact from it (tho of course others which balance that out, and more) - but I am suggesting it to be put in place against a current system which has lots of bad impact itself, and this measure would lessen many of those bad impacts. It needs to be measured against what we have now or might have in the future, and not in isolation.

Amongst other things, it's likely to mean that the govt pays out far less in tax credits, housing benefits, etc, etc etc - because the people on shit pay are most likely to be working for the just-about-staying-in-business companies that a trade tax might put out of business - but where that business ends up at other profitable companies who pay corp tax and decent wages while not being essentially subsided to be in business by the taxpayer, and where the goods won't cost more because otherwise that profitable company would not be able to be profitable and to stay in business against those who attempt to use what is govt subsidisy to try to undercut other businesses..

If a company goes out of business, the business that they did does NOT just disappear from the economy - it is transferred to another business within the economy. That's an important part of capitalist theory that people like to conveniently forget when considering something like this!

[abdoujaparov]

no more than corp tax is. It is not an extra cost to businesses, so it's not an extra cost to customers.

[lost]

'regressive' means what anyone decides it means towards the tax system. It's as meaningful as Cleggy saying that any changes will be 'fair'.

[eFestivals]

Well, yes it is. It's a cost on sales

no it's not, not if they're paying corp tax anyway. It effects the margins not a jot.

No, that isn't how you pay VAT. You pay VAT on your turnover from VATable goods and services.

I know how I pay my VAT each month thanks, and it is NOT like that.

VAT is paid on turnover from VATable goods and services, MINUS the VAT costs of buying in anything with which to provide those goods &/or services.

What you say about it is grossly inaccurate.

but the calculation of the VAT you have to pay is not based on netting off purchases against sales.

yes it is, or else every accountant in the country is doing it wrongly.

I've mentioned VAT because the scheme you have described would have the same impact - it passes the taxation burden that companies should carry from their profits onto to customers, in just the same way VAT works.

No it wouldn't.

You are grossly wrong about what VAT is.

And what I am suggesting is nothing like what you say there, because it is not an extra cost to the majority of businesses. The 'turnover tax' I am suggesting is to be off-set against the corp tax bill (as I've said continually, and you've ignored in every instance).

What we should taxing is capital - the money that would otherwise go to shareholders and company owners. The surplus they're taking off of you and me and banking as profit.....

PMSL - that's exactly what corp-tax is.

It's a system that does not work.

Company's can manipulate what is 'profit' and via that avoid corp tax - just as Starbucks have done. The fact that they're now saying they'll pay some only further proves how much they've been taking the piss - and so proves that corp-tax is an utter waste of time. It's essentially a voluntary tax.

As it happens, I've spent the last two months spending money to keep my own corp tax bill down - not because I want to 'cheat' the taxman (I do not), but because I'd be rather dumb to do anything else.

(what I'm doing will not reduce any corp tax over time if my company remains profitable, btw - but it will reduce it if it returns a loss in any year - I've chosen to do it like that; I could have chosen to do it other ways where it would certainly enrichen me).

Edited December 7, 2012 by eFestivals

[eFestivals]

http://en.wikipedia..../Regressive_tax

#

it's still something that can be - and is - interpreted in the way that is most convenient for any politician, no matter what any web page says.

[abdoujaparov]

no it's not, not if they're paying corp tax anyway. It effects the margins not a jot.

[lost]

#

it's still something that can be - and is - interpreted in the way that is most convenient for any politician, no matter what any web page says.

Edited December 7, 2012 by lost

[eFestivals]

it's a cost of doing business therefore it comes directly off the bottom line and reduces margins

it's a cost of doing business that is set against corp tax which is also a cost of doing business - so (for most) nothing comes off the bottom line and margins are completely unaffected.

The only ones affected are those businesses which the govt is currently subsidising - so any cost to customers comes back to customers via the lack of need of that subsidy in future and the tax system.

exactly - so the tax you pay is a percentage of your turnover minus the input tax you pay on any relevant goods or services to run your business...so the starting point is your turnover

No it is not - the turnover cannot be looked at in isolation with VAT. Turnover minus costs are unbreakably linked within VAT.

This is the bit I genuinely dont understand - at least I dont understand how you think it will make a difference. If I was a business under your new system, I would price my goods or services to deliver me a margin that covered the cost of the turnover tax. I'd have to do that to mitigate my risks.

but right now you'd do nothing different, because you have to price in corp-tax no differently to how you'd price in a turnover tax - after all, you're in business to make a profit.

If I dont do that, and my profit doesnt generate the level of corporation tax to cover the off-set (say because there have been unexpected rises in the costs of raw materials), then I'm in trouble.

no differently to if you didn't make a profit to then pay corp-tax. Nothing has changed!!!

If the business is too fucked to stump up corp tax then it's not going to be able to stump up turnover tax either, and nothing has changed with those companies. They go to the wall either way.

But where it does change is with the companies who should be paying corp tax but who are not - Starbucks, for example.

The only way that I can ensure that I maintain my margin is to price for the turnover tax. That means I'm passing the cost onto my customers...

Corp tax is priced in now at a greater rate than a turnover tax would need pricing for. Turnover tax would be off-set against corp tax so there is nothing extra to price in.

It can only be different to that if a 5 year old can out-do you at sums.

But the principle is right. We should be taxing capital - the money that companies take off of you and me to enrich their shareholders, not creating a system which regressively passes the cost of taxation through to customers

when did principles last pay your bills?

There's fuck all use in being principled about something that does not work and cannot be made to work. What do your principles get to say about you personally having to pay higher income tax because of that fact that it does not work?

If there were to be any increase in prices that came thru to customers, that can be given back to them in a progressive manner via the income tax system - because the tax system would have the money to do that via the extra that would be collected via a turnover tax compared to just corp-tax.

So absolutely nothing about a turnover tax has to involve the use of your favourite meaningless buzz word.

[eFestivals]

The clues in the bloody name for a start

no more or less than the use of 'fair' is in the phrase " a fair tax system".

Whether you think something is fair or not is dependent on your viewpoint - you might think it fair to tax the poor and let the rich off. It's no different with 'regressive' AT ALL.

I've yet to see any tax measure that hasn't been regressive (because it merely further entranches a whole system which is regressive), yet lots of them have been described as 'progressive'.

It's a meaningless word. It's use is only ever subjective.

Next up will you try telling me that what is ethical can be absolutely definitely defined?

[abdoujaparov]

it's a cost of doing business that is set against corp tax which is also a cost of doing business - so (for most) nothing comes off the bottom line and margins are completely unaffected.

The only ones affected are those businesses which the govt is currently subsidising - so any cost to customers comes back to customers via the lack of need of that subsidy in future and the tax system.

[eFestivals]

it's not my buzzword and neither is it meaningless - it's the commonly accepted term used to describe a system of taxation that takes proportionately more from people with lower incomes - like VAT

It's marketing, designed to present a tax idea as something it isn't, nothing more. Be suckered by marketing if you like.

But anyway, what I am proposing is not (your use of) regressive at all - you can only be seeing it as such because you are not joining up all parts of what I've said into a coherent whole against other parts of the tax system.

(I'll come back on the other bits of your post in mo).