Sunday, 9 January 2011

Luxury VAT rate

Reading blogger Not Yet Out of the Woods has come up with an idea to make VAT more progressive. A Luxury rate of VAT that could be charged on expensive luxury items only. It has been done before by the 1974 Labour government. See the post 'Progressing the VAT debate'.
This is something I advocated as an idea on Twitter but was shot down by people claiming that it would be 'to difficult to administer'. Well I don't see how. We currently have many different rates of VAT. All that would be required is a list of services or items and perhaps items over a certain value like expensive cars which could have a higher rate of VAT applied to them. It seems very simple to me.


  1. This seems to make good sense. It will never happen because Lib Dem MPs have not been told by David Cameron and Nick Clegg that it is a good idea.

  2. Thanks Nich. Yes no one is suggesting this form of progressive tax in or out te coalition.

  3. I've been saying this for years too. I would call it Super Luxury tax. Charge it on OTT items that only the rich can afford.