The cost of living

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dyqik
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Re: The cost of living

Post by dyqik » Wed Jul 27, 2022 2:34 pm

Woodchopper wrote:
Wed Jul 27, 2022 12:52 pm
El Pollo Diablo wrote:
Wed Jul 27, 2022 11:50 am
Quick question from me on inflation - how does the current high inflation affect government income from taxes, etc?
Returns from VAT increase automatically.
Only if rising prices do not result in a decrease in sales volume.

Inflation makes it more attractive to buy now on credit before interest rates go up, but also makes it harder to buy as much. Only if pay rises with inflation, and without significant lag, is that likely.

Since pay rises usually lag inflation, then inflation on VAT exempt essential items, like food staples, water, and rent, or on low VAT rated items like energy, will likely divert sales from full VAT items to lower or zero VAT items, reducing VAT returns.

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Gfamily
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Re: The cost of living

Post by Gfamily » Wed Jul 27, 2022 3:29 pm

Woodchopper wrote:
Wed Jul 27, 2022 12:52 pm
El Pollo Diablo wrote:
Wed Jul 27, 2022 11:50 am
Quick question from me on inflation - how does the current high inflation affect government income from taxes, etc?
Returns from VAT increase automatically.
Hmm, this assumes no change in discretionary spending on Vat rated goods and services.
My avatar was a scientific result that was later found to be 'mistaken' - I rarely claim to be 100% correct
ETA 5/8/20: I've been advised that the result was correct, it was the initial interpretation that needed to be withdrawn
Meta? I'd say so!

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Woodchopper
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Re: The cost of living

Post by Woodchopper » Wed Jul 27, 2022 7:47 pm

Gfamily wrote:
Wed Jul 27, 2022 3:29 pm
Woodchopper wrote:
Wed Jul 27, 2022 12:52 pm
El Pollo Diablo wrote:
Wed Jul 27, 2022 11:50 am
Quick question from me on inflation - how does the current high inflation affect government income from taxes, etc?
Returns from VAT increase automatically.
Hmm, this assumes no change in discretionary spending on Vat rated goods and services.
Yes, cetris paribus and all that. There would likely be a drop in demand.

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Woodchopper
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Re: The cost of living

Post by Woodchopper » Wed Jul 27, 2022 7:49 pm

dyqik wrote:
Wed Jul 27, 2022 2:34 pm
Woodchopper wrote:
Wed Jul 27, 2022 12:52 pm
El Pollo Diablo wrote:
Wed Jul 27, 2022 11:50 am
Quick question from me on inflation - how does the current high inflation affect government income from taxes, etc?
Returns from VAT increase automatically.
Only if rising prices do not result in a decrease in sales volume.

Inflation makes it more attractive to buy now on credit before interest rates go up, but also makes it harder to buy as much. Only if pay rises with inflation, and without significant lag, is that likely.

Since pay rises usually lag inflation, then inflation on VAT exempt essential items, like food staples, water, and rent, or on low VAT rated items like energy, will likely divert sales from full VAT items to lower or zero VAT items, reducing VAT returns.
Yes, indeed, it’s complicated. Consumption may well drop except among people who get index linked increases in income (eg pensioners).

We’ll have to see by how much, and the overall effect on how much tax the government raises from VAT.

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dyqik
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Re: The cost of living

Post by dyqik » Wed Jul 27, 2022 11:34 pm

With food and energy prices going up faster than other prices, then even with index linked incomes, spending will shift from full VAT to lower VAT expenditure.

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Brightonian
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Re: The cost of living

Post by Brightonian » Thu Aug 04, 2022 1:51 pm

I'm aware Melville's an anti-vaxxer or anti-masker or something, but during lockdowns I did wonder from time to time why the economy wasn't wrecked by so many people getting furloughed etc.

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Bird on a Fire
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Re: The cost of living

Post by Bird on a Fire » Thu Aug 04, 2022 2:08 pm

It was wrecked, though?
Tree dwellers leaping out the boughs shouting «Get the paper»
Trunk hugging rebels chucking petals at a detonator

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Brightonian
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Re: The cost of living

Post by Brightonian » Thu Aug 04, 2022 2:33 pm

Bird on a Fire wrote:
Thu Aug 04, 2022 2:08 pm
It was wrecked, though?
Well, different values of 'wrecked' really - I was thinking of Russian type destitution following the collapse of the Soviet Union, with pensions becoming worthless and so on.

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Re: The cost of living

Post by plodder » Fri Aug 05, 2022 11:32 am

Bird on a Fire wrote:
Sun Jul 17, 2022 11:25 pm
Almost like long term growth requires long term thinking.
It’s the opposite. The less people with big ideas and influence in positions of authority, the more growth, because capitalism. Problem comes when economic growth isn’t your #1 priority, or when growth bumps up against externalities like “fossil fuels are bad”.

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