Blogs - December 2010

It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt and everybody lives on credit. On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times... Read more

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Suppose that every evening, 10 men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we all our taxes, it would be something like;The first four men (the poorest) would pay nothing.The fifth would pay £1.The sixth would pay £3.The seventh would pay £7.The eighth would pay £12.The ninth would pay £18.The tenth man (the richest) would pay £59.So, that’s what they decided to do … the 10 men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said “Since you are all good customers, I’m going to reduce the cost of your daily beer by £20.”Drinks for the 10 men would now cost just £80.The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected, they would still drink for free. But what about the other six men? The paying customers? How could they divide the £20 windfall so... Read more

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When the VAT rate goes up to 20% in January 2011, it will have risen exactly 100% from when it was first introduced. That’s right … value added tax (what a ridiculous name … where is the added value?) was introduced into everybody’s lives (by Ted Heath and his cronies in 1973) at what now appears an absolute bargain rate of 10%! If the thought of paying another twenty pounds onto something only worth £100 doesn’t upset you, then perhaps the near certainty that in the near future this tax will also be added to existing zero rated items like FOOD, may get you stirred. However, when you think about it, is VAT any more unfair than any other type of tax? The answer, of course, is … it depends on who is paying it! From the government’s perspective, VAT is an easy option in every respect. It is an extremely difficult tax levy to evade, unlike some income taxes. It is also extremely easy to collect (not to mention cheap), because those... Read more

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