The Anonymous Widower

Value Added Tax

There is talk of value-added tax being raised in the budget today. I feel that a rise to bring us more in line with the higher rates in Europe would not be something that caused too much pain, as most VAT consumers pay is on things like electronic goods, that are imported anyway. Perhaps we need a higher rate on things like that and perhaps a 15% rate on services, such as building work!

VAT to me is a good tax, as the system it replaced, purchase tax, ruined my father’s printing business.  In the 1950s, printing work had two rates.  On something like an invoice form or a letterhead, that had been printed and you could write on, my  Dunlop handbills for their tennis tournaments all over the UK, the tax rate was zero, because it was not designed to be written on. Incidentally, the tax on plain paper was zero.  This anomally lives on in that we don’t charge VAT on newspapers and magazines. Why not?  A tax on OK, Hello et al would probably mean people read something more intelligent.

The outcome of this crazy tax regime was that more and more large businesses set up their own printing departments, buying plain paper and then using the new offset-litho techniques to create perfect copies of the originals created by craft letterpress printers like my father.

When my father had started up again after the Second World War, there were upwards of forty small printers in the old London borough of Wood Green.  When he sold up in the mid-1960s there were just two.

So not having a fair tax system cost hundreds of jobs.

June 22, 2010 - Posted by | World | , ,

2 Comments »

  1. The old purchase tax system was crazy. The only benefit it had was that PT was not payable, or was payable at a lower rate, on a lot of parts and components, whereas it was payable at a high rate on the manufacturer goods. This encouraged people to make things themselves.
    VAT is fine, but it could be set more sensibly. It is said that the craziest VAT is payable on a paper bag. Apparently there are seven sales in the supply chain of a paper bag and each one carries VAT that is recovered by the next in the chain, except the last. Unfortunately, the last step is when the bag is given away, and so the VAT is payable at 17.5% of nothing. Thank goodness for computers.

    Comment by John Wright | June 22, 2010 | Reply

  2. Fair point, John. Did you ever get to go to my father’s works in Wood Green? Some from school did.

    Comment by AnonW | June 22, 2010 | Reply


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