A (very) modest proposal *

A fabulous person I know just got a cool new car. It’s pretty nippy, chic even and also very, practical, part of which stems from its small engine that consequently doesn’t incur as much tax compared to the one it replaced. Park that fact for a mo tho and have a look at the Institute for Fiscal Studies (IFS) updated view (see picture above), of what impact the Pre-Budget statement spending plans (and associated forecasts) will have on net incomes in 2012-13.

Now the IFS is cool cos it splits the population into 10 different income groups ranging from poor to rich. Looking at this its clear that - 9th decile and richest aside -the poorer you are the worst you’ll be affected. So we’re all in this together are we? Are we fuck.

Which brings us back to a fabulous person getting a new car. As already mentioned part of this chic mobile’s practicality stems from how in the differentiated tax regime established to influence consumption of this particular type of consumer durable, it’s a winner.

Now there’s an interesting principle especially if, like me, you enjoyed reading Thorstein Veblen’s Theory of the Leisure Class and are mindful of the existence of Veblen (or positional) goods i.e. things that for essentially cultural reasons are more attractive the more expensive they are or at the very least have inelastic demand curves.

Putting these two things together kinda makes you wonder why, in this unprecedented age of sustained austerity when I reckon social cohesion is preferable to teaching more police how to use rubber bullets, the existence of such goods isn’t acknowledged a bit more and taken advantage of by our fiscal lords and masters. More practically why is the VAT charged on Aston Martins the same as on a Kia?

So here’s a thought, howzabout adding say 2.5% to the VAT charged on every new car sold in Britain that costs more than double the median new car price? In fact lets go further, lets step outside the Harrods food hall for a sec and do the same to everything we find on the other floors be it Louis Vuitton handbags, Rolex watches, Hermes scarves and so on and so on (this is totally rule of thumb shit, like am guessing the principle set by stamp duty of charging more the more expensive something is could apply here also).

Now as the title of this post makes clear this is a (very) modest proposal, like adding 2.5% to the VAT charged on such “Veblen” cars as Rollers and Beamers and what no would only generate an additional few million in tax revenue per annum. But, exploiting the kind of fanny willing to happily shell out a bit more to buy something he can show off with strikes me as cool cos it would mean taking more tax off the rich in a way that’s actually in keeping with the “we’re all in it together” bollocks.

And when you think of some of the bollocks bigged up in the Pre-Budget bollocks, the millions the extra raised on handbags and watches and cars and what no is serious moolah compared with the no much to be spent per year on trying to avoid creating an entire generation of unemployable NEETS.

Oh-oh have just thought of a counter argument - this will adversely affect tourism. Except no not really because the non-EU Saudi and Russian dodgy blerks it’d hit can claim back the VAT on UK purchases anyhow. Another option, obviously, would be to eat the rich, except that was one fuckova shite Motorhead song compared to Deaf Forever.


* No babies were harmed in the production of this post