VAT is 17.5%. If a business is VAT registered it does not pay VAT on the materials and services which it buys, specifically so that consumers don't get charged twice. A small business may choose not to be VAT registered, (although there's a maximum turnover, above which they don't get a choice). In that case, their customers are effectively paying VAT twice, but the company saves the effort of dealing with HMC&E. The threshold is quite low, I believe.
Just a small point, If a small business is not VAT registered (limit is £60k p.a. for taxable supplies), the customers do not pay VAT twice, as the unregistered business can not collect VAT for HMR&C. VAT on the supply is only suffered once (on either the end EU consumer or an unregistered business if earlier in the supply line).
The Grandparent does make a good point about the reliability of using top marginal income tax and social security rates, given the revenues of indirect taxes such as VAT (sales tax) and stamp duty, as well as capital taxes - It is wrong to say that the UK is low tax compared to the US.
However, the UK Government does provide strong support in health, education, and old age that is rarely matched in other countries:
- NHS - Decent healthcare whenever I've needed it. It's size allowing it to purchase and maintain an extensive range of equipment, which can't be matched by private alternatives in the UK (they refer paitients back to the NHS for many operations).
- State education. Fees are only necessary at University level (still free in Scotland), and these are small when compared to the US.
- State pension. Although small does provide support for the elderly.
The effect on immigration - a lot of people want to live in the UK. Is this a bad thing? I say it reflects the opportunities and open minded views present in the UK. The contribution provided by Sub-continent and Polish migrants shows that it can work.
