Tuesday, July 24, 2007

Ruth Kelly scraps VAT on rail tickets? Or makes taxpayers pay twice?

I've just watched a classic piece of linguistic doublethink by Ruth Kelly on Channel 4. Apparently, "taxpayers" will pay for part of the spending on the railways whilst "farepayers" will pay for the other part.

So, given that VAT is paid on passenger transports in a vehicle, ship or aircraft designed or adapted to carry more than 10 people (including the driver), does this mean Ruth Kelly has just scrapped VAT on rail tickets?

If the Government will insist on claiming a definitional difference between a taxpayer and a farepayer when it comes to funding the railways. it suggests - does it not - that fares are to be tax-free which must mean no more VAT right?

Wishful thinking huh? But I use the trains all the time so you can't blame me. Apparently, according to Kelly, we'd all be happy to pay high fares if we just had a seat.

Update: It would appears when I researched quickly that I misread something regarding VAT, in that VAT is actually zero-rated on vehicles designed for not less than 10 people (as opposed to be applied on vehicle for more than 10), my bad.

There still remains of course the point that farepayers are seen as different to taxpayers which is nonsense. Most people using the trains will be paying tax and paying for th trains that way, and will then be paying a second tax hit to pay for the trains through the fare.

Basically, it sounds like a separation, but really it's just saying we're paying for it all, and, because there is sod all competition if you need to use the train there's little choice we have..


Anonymous said...

Rail travel is VAT free at the moment, as is all mass transit in the UK.

I know this because I spent a year accidentally claiming back VAT I'd never spent, until my accountant pointed out the error of my ways... (yes, of course I repaid it!)

dizzy said...

Just updated misread this

jailhouselawyer said...

Might I suggest less drink and/or drugs when posting then there might be less garbled messages?

dizzy said...

Might I suggest you go back to cut and pasting blog posts, and then perhaps you could go and fuck yourself with a broom handle?

jailhouselawyer said...


Paul Linford said...

Not quite in the Harold Wilson league for political linguistic doublethink though.

"From now on the pound is now less 14pc less on the foreign exchanges. This does not mean, of course, that the pound in your pocket or in your purse or in your bank has been devalued."

Wrinkled Weasel said...

I use planes a lot but as far as I know, the Government does not subsidise EasyJet by one penny. In fact that b'tard Gordo has already in creased my spending this year on a spurious "Green Tax" on air travel.

The whole issue of railway funding is under siege by EU policies regarding competition and the trend is towards less subsidy and separation of core business, eg, freight versus passenger.

You can aportion at least some blame for the planned subsidy reduction to EU regulations governing competition.

In Scotland, where I live, there have been serious discussions about quasi nationalization of the railway system into one, non-profit organisation. Whether this will come to anything remains to be seen.

It really depends on what you think its social and demographic function is.

I was amused to hear Ruth Kelly blaming the Tories for the mess that the railways are in though.

Ted Foan said...

Dizzy - the relaxing effect of you're holiday seems to have worn off rather quickly! But I guess even you can't fail to be irritated by that JHL.

dizzy said...

Nah, I'm still relaxed :) If I wasn't I would have been far more creative.

Anonymous said...

"There still remains of course the point that farepayers are seen as different to taxpayers which is nonsense. Most people using the trains will be paying tax and paying for th trains that way, and will then be paying a second tax hit to pay for the trains through the fare.

The people who use the service will have to pay for it rather than have their ticket subsidised from general taxation (if you exclude railtrack/network rail). Which sounds OK to me.

dizzy said...

That wasn;t what she was saying though. She was saying the share of spending would be covered by taxpayers and farepayers, implying that there is no crossover between the two. Clearly only an unemployed homeless person who's bought a train ticket could be just a farepayer.

Chris Paul said...

Even unemployed homeless people are tax payers. There is VAT on lots of things after all - just not on train or other mass transport.

George Alagiah turned to camera after asking Ms Kelly to explain and said:

Did you understand that? Please text us or email us if you did as we haven't the first idea. OWTTE.

What I'm not understanding is how this is any different to what occurs now for much PT. There are fares and there are subsidies too.

Fares are paid by travellers. Subsidies are paid by all tax payers to maintain services and infrastructure which is also of course used for public goods like delivering mail, keeping lorries off the road, oiling the wheels of the economy, dampening down short haul air travel, reducing road journeys (particularly solo) etc.

guido faux said...

"Even unemployed homeless people are tax payers"

Outrageous isn't it? Funny how high taxes in the name of fairness always hammer the poor.