141–150 of 182 posts
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Your health insurance doesn't cover non-covered expenses. That retirement plans aren't a mystery doesn't negate needing 8+% returns to comfortably retire.
Investment return is always a problem. Pension funds don't magically create money!
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> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.
How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill. Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more V…
They know it exists, they don't know how it works or why (unless they run a business).
> Plus, prices in shops have to show VAT-inclusive prices to end customers
... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is calculated, what is tax and what is not, until after you've paid -- and even then you'll see an aggregated total, so if your basket included stuff that was taxed in different ways, you'll likely never know. Which nobody cares about, because we don't know how VAT works, for us it's just a random pricing element like the cost of materials. Except it's not: when it's said and done, it's a tax on fixed-income employees who can't justify a VAT return.
The american approach to sales tax, which seems complicated and "magic" at first, is actually much more transparent.
> Secondly, it's not regressive because the more goods and services you buy, the more you get taxed.
Nope. It's regressive because it's flat rate. A millionaire buying a dishwasher will pay the same amount of tax as a regular joe buying the same dishwasher, in practice penalising the poorest of the two. That's the definition of regressive taxation.
The theoretical notion that this is evened out by millionaires buying dozens of dishwashers versus joe's single one, is just that: theoretical. In practice, it does not happen: consumption levels are basically the same across most of the population.
> If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat.
If you buy a luxury yacht, it's likely not owned by you; it's owned by You™ Ltd, and filed as asset for this or that reason. You™ Ltd will diligently file its VAT forms, of course, and in the end it will get that VAT money back. Of course there are rules and enforcement etc etc, but in practice that's how it works for everything but the most outrageous items.
> rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT
No, but VAT makes it trivial to game the system in practice, which is why businesses are fine with it. Note how there are constant attempts at abolishing "pesky" laws like inheritance tax or stamp duty, which touch very few individuals but are hard to game; whereas VAT involves everything and everyone but it's just accepted as part and parcel of doing business, because in the end it's paid only by fixed-income n00b employees who can't justify a VAT return.
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> Many essentials like food and bus tickets have lowered (or zero) tax rates That's charity, not progressive taxation. Besides, VAT is fixed-rate, which makes it regressive in practice. > it's printed on every receipt you get But nobody is taught how it works, in school or elsewhere, and unless you run your own business you'll never find out. Also, because it's segmented, atomic changes to different segments are usua…
It's not possible to tax wealth. Unless you want to tell me how many Bitcoins I own.
This is how all tax works, btw. Income tax is nothing but a wealth tax limited to wealth accumulated over a certain period. There is nothing impossible about it.
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I think parent is referring to the classic "VAT advance": in most countries, after a business registers for VAT, after 12 to 24 months the State will calculate your "expected VAT turnout" for the following 1 or 2 years, and demand advance payment. This is because some 80% of businesses don't survive the first 24 months anyway, so the State tries to collect every penny before they go bust. Ironically, that advance pay…
That sounds nuts, but it's nothing like how the system works in the UK. As a small business you complete your VAT return and pay your balance at the end of each quarter. A large business (turnover > £2M) will make payments on account more frequently so they don't get to keep hold of the VAT that has been paid to them as long.
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The seller is also supposed to collect evidence of the location of the purchaser (billing addresses, IP addresses, etc.). By the time you're required to collect private data for each transaction, it becomes more than simply the kind of drudgery you can automate away and becomes a burden that is a bit too much for one-person entreprises.
Purchaser inputs details in online form, tax is applied by location, purchaser buys thing. What am I missing here?
Also, try explaining how simple all this is to the self-employed women selling crafts online using PayPal.
Yes, this has been quite an amazing f-up by the tax authorities in the EU. I wrote a blogpost about it the other day: http://blog.satago.co.uk/2014/11/what-is-this-vatmoss-mess/ imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now.
The really major f-up is that of online sellers (it's a major pain for sellers of physical goods as well, it's just easier for them to at least know which country they're selling to) who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. The reasoning behind the law is perfectly logical, and the problem they're trying to…
The people who didn't know about it are those it is the worst for. Small traders who were not VAT Registered. There is no reason why someone below the VAT threshold should be poking around in VAT legislation just in case it will suddenly apply to them. When I wrote this post (http://rachelandrew.co.uk/archives/2014/10/13/the-horrible-i...) in mid-October, there was next to nothing online, other than in a few PDFs from tax experts. Certainly nothing that would have alerted non VAT registered individuals selling a few knitting patterns and so on. To blame those people, and suggest they were sticking their head in the sand is wrong. They didn't know.
The main problem with these changes is that they require the seller to collect information about the buyer's location. It makes all the sense for physical goods, but it is nigh impossible for digital ones, and pretty much misses the whole point of online economy. In my opinion, the VAT should be charged based on the delivery address; for digital goods, it would be ideal that all purchases are considered local, and th…
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Purchaser inputs details in online form, tax is applied by location, purchaser buys thing. What am I missing here?
At least in the UK, you'll be required to keep such private data for 10 years, which also means registering as data processors and controllers with the Information Commissioner's Office. See this: https://www.gov.uk/government/publications/revenue-and-custo... Also, try explaining how simple all this is to the self-employed women selling crafts online using PayPal.
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The really major f-up is that of online sellers (it's a major pain for sellers of physical goods as well, it's just easier for them to at least know which country they're selling to) who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. The reasoning behind the law is perfectly logical, and the problem they're trying to…
>if those affected had just bothered to try. How about: If those affected had even known that this change was happening. I'd certainly heard that they were changing the VAT rules to crack down on the likes of Amazon. That I'd now need to charge VAT based on country of consumer. That's not the crappy part of the legislation as I currently don't need to charge any VAT at all in the UK. I hadn't heard that my VAT thresh…
- You are responsible for verifying the location of your buyer (how? who knows!)
- It is not enough to know the country code of your buyer. For example the Canary Islands have country code ES but have a different VAT rate from mainland Spain
- Some VAT rates can be fractional, so you can run into problems if you were using integer calculations in cents to prevent rounding errors (thankfully, for digital services all VAT numbers are round number starting this year, let's hope it stays that way)
- If you register for a MOSS then you pay VAT in euros, but you may have charged your customer in a local currency (GBP, DKK, CZK or SEK). You need to use the exchange rate at the day of the sale
This is just the top of my head, there are probably a bunch of minor issues I forgot.