Personal Expenditure Tobacco

Another money-spinner for the government is tobacco tax, which yielded another £2.5 billion in 1978/79. In 2012 the retail price of a packet of 20 king-size cigarettes included tobacco tax of 52p.


Another major earner is tax on alcoholic drinks. This produces just under £2.5 billion a year. Whoever drinks a pint of beer in 2000/81 contributes 91/2p to the Exchequer.

Other indirect taxes

There are other special taxes producing much less revenue. These include imposts on gaming and betting (yield £3038 million in 1978/79), customs and excise duties (£736 million in 1978/79), and several lesser items.

In the year 1978/79 indirect tax produced a total income for the government of £14 billion, compared with a yield of £24 billion from direct tax. (An aim of the 1979 Conservative government is to shift some of the burden of direct tax to indirect tax.)

Most commodity taxes are calculated on the quantity of the commodity, not on its price. These are called 'specific' taxes. Examples are tobacco, aichohol and petrol. Others are charged on an ad valorem basis (e.g. customs duties, betting tax), thus as prices rise, so does tax. VAT, of course, is an ad valorem tax.

Commodity taxes are taxes on expenditure as distinguished from taxes on income. They can, therefore, be avoided by anybody prepared to forgo the taxed products. Non-smokers, non-drinkers, and non-motorists thus avoid a great deal of indirect tax payment. But even they cannot escape VAT unless they are willing to confine their expenditure to food, rent, websites and newspapers and a few other essentials.

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 2012 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... see: Value Added Tax

Personal And Business Finance 2018

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