Thursday, 1 July 2010


Its extraordinary how outraged the comment on increasing VAT to 20% becomes. Its £3 a week for the average person for heavens sake. It excludes food, children's shoes & clothing, books, newspapers and includes a reduced rate on heating bills. Just how outraged do you think you should appear? Yes its not as progressive as increasing income tax, but its a lot cheaper to collect (retailers & businesses do all the work) and its collected every quarter on the dot - or serious fines ensue.

The coalition's mistake was not increasing VAT, but not to use that increase for a specific purpose. It should have been used as a locally-based sales tax covering all local government expenditure. Amounts raised in VAT and those spent by local authorities (roads, transport, care services etc) are remarkably similar in this country - around £90bn - and a whole layer of local bureaucracy could be saved in the process. This involves valuing properties, calculating council tax, printing & sending demands, collecting & enforcing late payers, legal fees etc. I'm sure you get the picture.

Throughout the US a local sales tax is used to pay for local services. It enhances democracy because local people become interested when their money is on the line and it puts people at the centre of local government. After all, the only way to increase local government revenues under such a system, is to increase either businesses or consumers in your area. Not exactly a nimby's charter then, and rather responsive to demographic changes from immigration, no?