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What about scrapping corp tax, and replacing with a higher VAT rate?
by TomGullen 11y ago
What about scrapping corp tax, and replacing with a higher VAT rate?
- petercooper 11y agoThe public would go mental. VAT is seen as being most onerous on low earners. Something like a very low "turnover tax" for businesses could potentially work though. We take about £40bn in corporation tax each year. Total business revenue in the UK is around £3.2tn, so a 1.25% turnover tax would cover it.
- tonyedgecombe 11y agoOr just tax dividends as normal income.
- petercooper 11y agoWe are not far away from that with the new regime, but ultimately that's mostly disproportionately onerous on small, risk taking entrepreneurs and small businesses.
- tonyedgecombe 11y agoFor those people they would clearly stop drawing dividends as there would be no tax advantage to doing so. I'm not sure how you could say it is onerous (other than the fact they may have to pay more tax than they would have).
- petercooper 11y agoFor right or wrong, the British tax code has long recognized that those putting their own capital at risk do not necessarily have the same safety nets of typical employees and taxes their rewards at a lower rate. This is why both dividend taxes and capital gains taxes are lower than income taxes, and also why Entrepreneur Relief exists.
- tonyedgecombe 11y agoI've read several times that the government doesn't think it can raise VAT much higher because it would start loosing money from an increase in excise fraud.