TSW Commission: Most goods and services should be subject to 23% VAT and not zero or 13.5%

Brendan Burgess

Brendan Burgess

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6.8 The Commission recommends widening the Value Added Tax (VAT) base and limiting the use of zero and reduced rates of VAT. The VAT treatment of goods and services to which those rates currently apply should be reviewed to assess if it continues to be appropriate.
6.9 The Commission recommends that the rate of Value Added Tax on those goods and services currently attracting a second reduced rate (currently 9 per cent) should be increased over time to the reduced rate (currently 13.5 per cent).
6.10 Due to the relatively large share of goods and services attracting zero and reduced rates of Value Added Tax in Ireland, the Commission also recommends that the reduced rate of 13.5 per cent should be increased progressively over time.
6.11 The Commission does not support the use of temporary Value Added Tax reductions as a short-term stimulus measure.
 
A single VAT rate of 19% or 20% would be best of all.

Simple for all to understand and administer.

Tax system wouldn't be arbitrarily encouraging one type of consumption over another via higher/lower rates.
 
Sophrosyne said:
Why so?
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I feel it gives me more control and more choice. E.g. If I want to save more, or invest more, I can cut my consumption and save on tax. But if the tax is already gone from income tax, I have no control or choice.
 
AJAM said:
I feel it gives me more control and more choice. E.g. If I want to save more, or invest more, I can cut my consumption and save on tax. But if the tax is already gone from income tax, I have no control or choice.
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The reason I asked is because people have a record of the amount of income tax they pay, but unless they keep meticulous records they don't realise just how much VAT they pay and over time how much more they will pay on essential goods.
 
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You may be right. Over the long term I might end up paying more tax. But at least I get to have some modicum of control over that decision.
 
Of course, this might never be implemented, but if it were, it would have to be managed carefully.

It not just about the consumer but also about pricing and competitiveness for manufacturers and providers of goods and services.
 
AJAM said:
If forced to choose, I would rather see higher vat rates than higher income taxes
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That is unequitable. VAT rates impacts everyone, despite their income. Income taxes are based on income levels, so the higher the income, the more tax you pay.
 
Steven Barrett said:
That is unequitable. VAT rates impacts everyone, despite their income. Income taxes are based on income levels, so the higher the income, the more tax you pay.
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But people who own their own home don't have to pay rent or a mortgage.
People with no children don't have to pay childcare costs.
People who live near work or amenities don't have as many transport costs.
There is a big difference between gross income and what your descressionary income is. If you are wealthy but have a moderate income then you probably need a lower income than someone who is not wealthy but has a high income. VAT is fairer in that context.
Of course there's no scenario or model that is fair to anyone but our current system that ignores wealth and only taxes income is very inequitable.
 
This is never going to happen as it is political suicide for any party who brings it in. Some of us are of an age who recall when FG tried to put it on Kids shoes. It would also have to be accompanied by massive increases in social welfare payments to cover the increased costs for people, a rise in minimum wage (which would then drive up other wage costs) and would thus drive up business costs. In effect, it is taxing things people have no choice but to buy.
 
Peanuts20 said:
This is never going to happen as it is political suicide for any party who brings it in. Some of us are of an age who recall when FG tried to put it on Kids shoes.
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I agree it's not going to happen. Many people are against what's in their own medium term interest.
Peanuts20 said:
It would also have to be accompanied by massive increases in social welfare payments to cover the increased costs for people,
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Essential items such as food and children's clothing are zero rated. I'd be surprised if there was any significant increase in costs for people on low incomes.
Peanuts20 said:
a rise in minimum wage (which would then drive up other wage costs) and would thus drive up business costs.
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Most people on the minimum wage live in medium to high income households. Why would an increase in VAT require a increase in the minimum wage?
Peanuts20 said:
In effect, it is taxing things people have no choice but to buy.
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No, essential items are zero rated.
 
T McGibney said:
If only.

Bottled water is 23% for example, even when there are boil water notices in force. It's impossible to avoid paying 23% VAT unless perhaps you're a self-sufficient hermit.
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So remove VAT on bottled water or other such items. It's hardly insurmountable.
 
Purple said:
So remove VAT on bottled water or other such items. It's hardly insurmountable.
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Nothing is insurmountable, but it goes a lot, lot deeper than bottled water.

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The list is endless.

VAT is an anti-consumer sick joke,
 
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