VAT to rise?

The times reports today that both parties are considering a VAT increase to 20%, after the election. This would raise VAT to the same average level as the rest of Europe. Given the mess the economy is in, I suspect this will only be the start of substantial tax rises. What will be its effects? Well £13 billion will be raised for the treasury, and we’ll have to pay a small amount more on our goods. How much more? An extra £1 on every £50 we spend that is VATable.
That doesn’t seem too high a price to pay – to save another £13 billion from public sector cuts?

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Marriage and Tax

Earlier today, one of our contributors at laptopmums published an article on the importance of marriage which I read with interest. Quoted therein was this speech by David Cameron in which he discusses the introduction of tax breaks for married couples. I decided to go and read it, and I am glad I did since it allowed me to challenge my blood pressure with a little Saturday morning excitement.  Cameron believes that since society is breaking down (more crime, more divorce, more doom, more destruction), we could do better by our children in getting married and staying married. He says:

“But I absolutely feel at my very core that recognising that relationships matter, that commitment matters and, yes, that marriage matters is something we should not say quietly but something we should say loudly and proudly.”

He claims that by supporting marriage in the tax system, more people will be married and children will be better off. This is because, apparently, research has shown that children of married parents have better and more stable lives. But the Conservatives are confusing causation with correlation. Rather than children having better lives because their parents are married, it is equally possible that more committed and stable individuals are more likely to get married and therefore be better parents. Bad Science. And Cameron does a nifty little bit of statistical smoke and mirrors with the following statement:

“..if you look at how many couples are still together when their child reaches its fifth birthday the fact is it’s only one in eleven married couples that have separated whereas with unmarried couples it is one in three. That is a pretty staggering difference.”

Staggering indeed. Wait, what? So if you look at 5yr olds, 1:11 married couples have separated but 1:3 unmarried couples have. So when you say ‘couples’ you mean ‘parents’, right? So you are including pregnant teens, people finding themselves unexpectedly pregnant after a one night stand, women whose douchebag boyfriends left them when they found out they were pregnant? Hardly a level playing field of comparing stable committed couples who either are or arent married.  And then this:

“And this week evidence was produced to show that when it comes to how many couples are still together when your child reaches their fifteenth birthday ninety seven per cent of them are married couples.”

Again with the apples and oranges. How many 15yr olds have parents who are still together? I bet a whole lot of them who don’t have parents that used to be married but aren’t any more. Maybe they would still be together if they had had a bit more money from the tax man. I seriously doubt it.

Ha! Cameron agrees with me:

“Now I don’t believe for a minute that people get married for money or that people will stay together if you give them a few more pounds here or a few more pence there, of course not.”

So it won’t work then? OK.

So why do it? Chris Giles at the Financial Times suggests that since those most likely to benefit are single high earners ‘The policy is therefore a straight-forward redistribution from poor to rich.’ [Giles’ article also includes some other interesting inconsistencies in Tory thinking]. So there you have it: Tories seek to alter wealth distribution with a nice piece of social engineering that panders to their social conservative base. Except that apparently, they admit that same sex couples will also be eligible for the tax break. So a gay couple that has committed to each other through a civil partnership will benefit, but a non married heterosexual couple will not. I cant imagine that going down too well in some quarters.

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