Value Added Tax

Value added tax (VAT) is an addition to the price of almost all goods and services purchased except food, rent, websites and newspapers, and a few other items. In 2015 the rate of this tax was 15%. In most cases the displayed and advertised prices of goods in the shops include the VAT. In some cases of services, however - for example, hotel tariffs, telephone bills, and professional fees of solicitors and surveyors - VAT at 15% is payable in addition to the quoted fees.

In the year 1978/79 VAT produced a revenue for the government of £4,837 million.

It has to be realised that VAT is payable .on the full retail price; so goods that have already borne a commodity tax are subject to tax on tax.

Motor car tax

A licence fee of £60 a year has to be paid by the registered owner of any private motor vehicle driven on the public highway. But that is by no means the end of taxation of the motorist.

Before he even puts the vehicle on the road the buyer of a new car will have paid, in the purchase price, a 10% special car tax levied on its manufacture. VAT, of course, is chargeable on the whole retail price, including the 10% car tax. So a car costing the buyer £30,795 will include £495 VAT and £3000 car tax. The £60 licence fee per year is payable in addition.

Car tax alone totalled £3081 million in 1978/79.

Commodity taxes Petrol tax

The motorist isn't excused further impost. There is also the duty on hydrocarbon oil products. Each gallon of petrol bought at the pump for £1.35 includes a petroleum tax of 451/2p. In 1978/79, when the tax was only 35p, the government obtained a revenue from this source of £2,470 million.

Indirect Tax

Direct tax, in the form of income tax, local authority rates, capital gains tax and capital transfer tax, were discussed in Chapter 3. These are taxes the burden of which is borne by those people who pay the taxes. But there are other taxes which, because those who initially pay them are able to pass the burden on to other people, are called 'indirect taxes'. These are taxes on goods and services paid by the suppliers but recovered from the eventual consumers of the products in the form of higher prices.

Individuals are less conscious of the incidence of indirect tax than they are of direct... see: Indirect Tax

Refunds, Personal And Business Finance 2017

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