Reply to: 13% inflation

[WTFH]

OK, ignore the argument, stick to tired, Spectator-inspired rhetoric and ancient chimeras like selling the NHs to the Americans. Any idea just how foolish that sounds?

High taxation to fund high public spending on large infrastructure projects is pure socialist thinking. The Conservative way is to enable private enterprise to do it for you - and not by using Blair's idiotic PFI mechanisms. After all, it worked for the Victorians.

Enjoy your little world. It seems nice.

So, zero suggestions, and again you mistake Bliar for the Tory party - not the first time in your case.

This government has increased the tax burden, but has not used it to fund higher public spending. If it did, then we'd have 40 new hospitals, a full HS2, etc. But no, they have increased taxes and REDUCED public spending.

[malvolio]

OK, ignore the argument, stick to tired, Spectator-inspired rhetoric and ancient chimeras like selling the NHs to the Americans. Any idea just how foolish that sounds?

High taxation to fund high public spending on large infrastructure projects is pure socialist thinking. The Conservative way is to enable private enterprise to do it for you - and not by using Blair's idiotic PFI mechanisms. After all, it worked for the Victorians.

Enjoy your little world. It seems nice.

[WTFH]

OK. The last time we were in such financial straits was was the late 70s. We got out of that by Thatcher's difficult and painful monetarist policies, which were all about putting spending back in the hands of the populace, not government and getting key industries out of their nationalised inertia. Since austerity has failed and the recent shift to a more socialist-light economic pattern of high tax/high public spends has also failed, perhaps we should try the 80s approach again. Or is that too istorical to be relevant?

The idea that the government of the last decade have been anything socialist is a joke. The fact that you believe it is some left wing crowd just illustrates the problem.

Thatcher's policies involved selling off everything that was nationalised. The government has nothing left to sell to the public apart from the DVLA, the passport office and the roads, but it could sell off the NHS to the American businesses.

And taxing dividends is utterly hopeless, incidentally.

The last time it was tried, what happened?

It's a slippery slope to tax the rich, eh? So just keep hammering the poor is that your solution?
Remove care, remove benefits, remove any sense of worth, but make sure we blame them, with their mobile phones (that they need to have to be able to get benefits), and look at the amount of handouts we give them, it's almost as much as Dido Harding made for her mates with Test & Trace, or the other contracts that went to Friends of the Tories.

[malvolio]

Who did what and when is not a distraction if we want to learn from our mistakes now.
How do we address the now situation? Is it by repeating mistakes, or learning from them and doing something different - such as taxing dividends and off-shore?

OK. The last time we were in such financial straits was was the late 70s. We got out of that by Thatcher's difficult and painful monetarist policies, which were all about putting spending back in the hands of the populace, not government and getting key industries out of their nationalised inertia. Since austerity has failed and the recent shift to a more socialist-light economic pattern of high tax/high public spends has also failed, perhaps we should try the 80s approach again. Or is that too istorical to be relevant?

And taxing dividends is utterly hopeless, incidentally. The individuals who can go offshore will do so, taking their investments with them. The national institutions that rely on them to pay minor stuff like retirement pensions will be hammered. Other businesses, like the trains for instance, will also lose large investors meaning their income disappears. And how exactly do you plan to tax "offshore" - apart from anything else (such as Amazon and Google inter alia), we have no jurisdiction and if Infosys decides not to pay UK CT, what would we do about it?

[PCTNN]

What is the correct response then? Spend or save?

Give to charity

[WTFH]

Who did what when is a lot more of a distraction from the argument ...
It's the now we need to address. How we got here is irrelevant.

Who did what and when is not a distraction if we want to learn from our mistakes now.
How do we address the now situation? Is it by repeating mistakes, or learning from them and doing something different - such as taxing dividends and off-shore?

[malvolio]

Ah, yes, nice bit of Wailing there.

Reducing VAT is a nice idea, particularly if it is off energy. reducing it off luxuries has a bigger positive impact for Tory voters than for the general population.

The Tory voters will also conveniently forget who it was that raised it from 8% to 15% (1979), then from 15% to 17.5% (1991) and from 17.5% to 20% (2011). They also forget who reduced VAT on domestic fuel & power (down to 5% in 1997).

And where will the money come from to plug the gap, or does the government just increase borrowing like it has been doing for the last decade? Austerity didn't work. Trickle down didn't work. And yet it's always someone else's fault.

Who did what when is a lot more of a distraction from the argument than thinking I get all my knowledge from the Mail (as opposed to the equally nonsensical Grauniad I suppose).

It's the now we need to address. How we got here is irrelevant.

[NotAllThere]

Ok clever clogs, how would *you* fix the current cost of living crisis?

Step 1. Invent a time machine and go back in time

You can probably figure out the rest of the steps.

[vetran]

Banging on about VAT reduction as if that will put money into the poorest pockets is typical of Tory policy. Inflation in double digits will not be offset by a 1% or 5% reduction in VAT.

Let's look at the most important things in life - food & drink.
What is the VAT on meat?
What is the VAT on fruit & veg?
What is the VAT on cereals & pulses?
What is the VAT on culinary herbs?
What is the VAT on canned/frozen food (excluding ice cream)?
What is the VAT on milk?
What is the VAT on tea?
What is the VAT on coffee?

How will reducing VAT help people trying to have food on their plates?

There is an argument the cost of things include overheads which are taxed and thanks to the B word could now be subsidised/ made more efficient.

https://ahdb.org.uk/estimated-milk-production-costs

Though VAT is not the right hammer in many cases.

[WTFH]

That's actually a list of one item, in this context...

Yes, I do actually understand that list; I'm not on an infinite income myself. But it does ease the burden on other stuff people buy that isn't food (including the takeaways/Deliveroos many of the lower paid seem to live on) and other living costs such as fuel (how much of a litre of petrol or 1 KWh is VAT?), and it is a positive comfort factor. If it encourages commerce then it is a positive. If it encourages more borrow-to-buy spending then it is at best neutral, but possibly slightly inflationary. Overall I believe it is a good thing. YMMV (and if you do, try a more relevant argument!).

Ah, yes, nice bit of Wailing there.

Reducing VAT is a nice idea, particularly if it is off energy. reducing it off luxuries has a bigger positive impact for Tory voters than for the general population.

The Tory voters will also conveniently forget who it was that raised it from 8% to 15% (1979), then from 15% to 17.5% (1991) and from 17.5% to 20% (2011). They also forget who reduced VAT on domestic fuel & power (down to 5% in 1997).

And where will the money come from to plug the gap, or does the government just increase borrowing like it has been doing for the last decade? Austerity didn't work. Trickle down didn't work. And yet it's always someone else's fault.

[DealorNoDeal]

Aren't tax credits/UC a way of easing the tax burden for those on lower pay?

[Zigenare]

For the last few days I've been listening to economic experts - all say you don't do tax cuts now otherwise you make inflation worse as the factors causing inflation are not within the UK control. The argument is about the BoE mandate over interest rates.

Also when taxes are cut they are cut for the wealthiest members of society, and trickle down economics has been shown not to work.

Thought not.

[malvolio]

Banging on about VAT reduction as if that will put money into the poorest pockets is typical of Tory policy. Inflation in double digits will not be offset by a 1% or 5% reduction in VAT.

Let's look at the most important things in life - food & drink.
What is the VAT on meat?
What is the VAT on fruit & veg?
What is the VAT on cereals & pulses?
What is the VAT on culinary herbs?
What is the VAT on canned/frozen food (excluding ice cream)?
What is the VAT on milk?
What is the VAT on tea?
What is the VAT on coffee?

How will reducing VAT help people trying to have food on their plates?

That's actually a list of one item, in this context...

Yes, I do actually understand that list; I'm not on an infinite income myself. But it does ease the burden on other stuff people buy that isn't food (including the takeaways/Deliveroos many of the lower paid seem to live on) and other living costs such as fuel (how much of a litre of petrol or 1 KWh is VAT?), and it is a positive comfort factor. If it encourages commerce then it is a positive. If it encourages more borrow-to-buy spending then it is at best neutral, but possibly slightly inflationary. Overall I believe it is a good thing. YMMV (and if you do, try a more relevant argument!).

[WTFH]

Banging on about the rich gaining a tax advantage is faintly ridiculous. They are about 2% of the population. If they are encouraged to invest they may actually increase national income. They are good at making money, it's why they are rich in the first place.

That's perhaps why Truss is talking about VAT reductions and cancellation of egregious existing or planned taxes such as the NI uplift and green levies aimed at paying for an unachievable goal. Putting more disposable income in people's pockets is not inflationary and might actually increase tax revenues indirectly. What it will achieve is to ease the burden on the lower paid who are struggling with the constant increase is basic living costs.

Similarly putting up CT would only mean an exit of non-national companies to more profitable countries, while leaving it alone and stable, or even reducing it slightly will encourage inward investment.

What is fairly certain is that doing a Sunak and continuing the status quo for a few more years is not going to help anything - after all, it's largely why we are in this mess in the first place.

Banging on about VAT reduction as if that will put money into the poorest pockets is typical of Tory policy. Inflation in double digits will not be offset by a 1% or 5% reduction in VAT.

Let's look at the most important things in life - food & drink.
What is the VAT on meat?
What is the VAT on fruit & veg?
What is the VAT on cereals & pulses?
What is the VAT on culinary herbs?
What is the VAT on canned/frozen food (excluding ice cream)?
What is the VAT on milk?
What is the VAT on tea?
What is the VAT on coffee?

How will reducing VAT help people trying to have food on their plates?

[malvolio]

For the last few days I've been listening to economic experts - all say you don't do tax cuts now otherwise you make inflation worse as the factors causing inflation are not within the UK control. The argument is about the BoE mandate over interest rates.

Also when taxes are cut they are cut for the wealthiest members of society, and trickle down economics has been shown not to work.

Banging on about the rich gaining a tax advantage is faintly ridiculous. They are about 2% of the population. If they are encouraged to invest they may actually increase national income. They are good at making money, it's why they are rich in the first place.

That's perhaps why Truss is talking about VAT reductions and cancellation of egregious existing or planned taxes such as the NI uplift and green levies aimed at paying for an unachievable goal. Putting more disposable income in people's pockets is not inflationary and might actually increase tax revenues indirectly. What it will achieve is to ease the burden on the lower paid who are struggling with the constant increase is basic living costs.

Similarly putting up CT would only mean an exit of non-national companies to more profitable countries, while leaving it alone and stable, or even reducing it slightly will encourage inward investment.

What is fairly certain is that doing a Sunak and continuing the status quo for a few more years is not going to help anything - after all, it's largely why we are in this mess in the first place.