VAT To Be Cut To 15%?

[Hammer]

The BBC are reporting that VAT (the 17.5% tax we pay on nearly all goods and services) is being cut for the first time since...oh, around the time of Black Wednesday in the 90s.

It's going down to 15% apparently.

Could be interesting to see what happens with this - the Government can't afford to cut too many taxes, otherwise it just gives the state more debt (unless they cut public spending as well, which is unlikly since as the economy goes down the pan unemployment is increaseing, meaning the government have to pay more money to folks on the Dole and so on).
The plan for this to boost spending is also dependant on businesses passing this cut onto the consumer by cutting prices and so on, which I don't think will happen.

[djtoast]

no, in this country consumer prices tend to include VAT eh? so i doubt that something costing £14.99 including vat is suddenly gonna be marked down to £14.22

in north america, typically sales taxes are added at the till and the price on the shelf doesn't include them, and is a "sensible" amount just under a whole number of dollars... so there i could believe the savings might be passed on.

when you consider that when vat was removed from, er, feminine hygiene products (not really what most people would call "luxury goods" ), the saving was not passed on to consumers and got added onto stores profits instead, i wouldn't hold out much hope of it happening with ipods and donuts.

[Potatojunkie]

Buy stuff wholesale.

[GoddamnElectric]

Surprised me this did - the Treasury has shown little to no interest in changing the rules on it in any substantial way since the 1970's. But if you want to get more cash in consumers pockets then lowering the cost of consumer goods in one fell swoop isn't a bad idea at all. I think their game is that when the price inevitably has to go back up again (after the immediate crisis is over) it's easier to disguise the cost of goods rising as inflation etc. If you dropped income tax just now instead you'd have a tough time putting it back up again later, it would be too overt for people to swallow.

[MarkMono]

Our economy is fake, the fact that most professionals are aware of this is classic doublethink.

[GoddamnElectric]

It wasn't so long ago that the Government was lamenting how little people save these days. Now we're saving, and apparently it's doomed us all. I'm coping with the situation by learning Chinese.

[MarkMono]

Thats a darn good coping mechanism.

Italian, here.

[m0nkeymafia]

Hope that if this goes ahead they will cut the flat rate scheme rate too.

[Semprini]

This is good news for me from a work perspective.

[Hammer]

The markets seem to be very happy with this news (plus the higher rate of income tax), despite the Government announcing that the the economy is expected to shrink by 1.25% next year.

[TSR]

Has been confirmed:
http://news.bbc.co.uk/1/hi/uk_politics/7745340.stm

Chancellor Alistair Darling has cut VAT from 17.5% to 15% for 13 months in his pre-Budget report - saying it would put about £12.5bn in consumers' pockets.

But top rate tax will rise to 45% and all National Insurance contributions will go up 0.5% from 2011.

And he said he was increasing duties on alcohol, tobacco and petrol so they would remain at the price they are now

Edit: Seem to remember hearing on the news this morn that the 'top earners' tax affected £150k+ earners

[Semprini]

I'm liking this tapering / scrapping of the personal allowance for the high earners.

[MarkMono]

Hey everyone, why don't we bail the government out with our money?

That'll put off the unsustainable nature of capitalism completely demolishing our economy for another few years.

[Potatojunkie]

"Yes we're borrowing money, every other government is borrowing money".

Who from?

[Dec]

China.