VAT cut

[Gary]

Pain in the back side for our accounts department!

[asperity]

The simplest way of dealing with this prob, as Vince Cable (the only guy that seems to know what needs doing says); would have been to just raise the income tax threshold, taking the lowest paid completly out of tax payments, whilst hitting the rich with a higher rate than 45%.

 

Raising the lower threshold to ?12000 at least would take millions of the poorest paid out of tax altogether and at the same time enable government to save money by scrapping the wasteful tax credit scheme and the 18000 civil servants' jobs required to service it.

I'm not convinced that the 45% tax will nett all that much extra, but I'm willing to be convinced by hard figures.

[observer]

I'd prefer it to be 80% and put the Inland Revenue on a percentage of the take as an incentive!

[Paul Kennedy]

The simplest way of dealing with this prob, as Vince Cable (the only guy that seems to know what needs doing says

 

Saying and doing are two very different things Observer, especially when he will never be in a position of "doing".

[Paul Kennedy]

I'd prefer it to be 80% and put the Inland Revenue on a percentage of the take as an incentive!

 

At what income level would the 80% be levied Observer.

[Paul Kennedy]

So the consensus here seems to be that 2.5% is no big deal which is odd because if it had been a 2.5% increase I?m sure the very same people would claim it?s almost the end of the world!

 

 

I think you have missed the point Bill, the consensus is that the 2.5% reduction will not increase demand and thereby stimulate the economy, and in my opinion that consensus is correct. There was no discussion about raising VAT, but what I can say is that it would be an effective way of raising money to pay off the massive debt that the country will be running up during the recession. My bet is on it going to 20% over a period of time, and there might even be a higher rate for items deemed to be luxuries, and if domestic energy prices fall significantly they might even increase the 5% VAT rate on that.

 

If the intention of whichever party is in Government will be to pay of the country's debt, given the level it will be at in the next couple of years, it will require some robust measures, and a combination of increased taxes and tightly controlled State spending.

[Bill]

My point Paul was that when bank interest rates move by a quarter of one percent, it makes headline news and people start jumping off high buildings so a 2.5% reduction in Vat that affects everyone is indeed a significant amount. Ok, in comparison to the current 50% off sales, 2.5% doesn?t seem much so it probably won?t make much difference to the pre Christmas sales but in the longer term it will affect peoples spending.

 

Clearly the idea isn?t just to put money in peoples pockets, if they wanted to do that, then they could have just bunged everyone a few hundred quid in a brown paper envelope and hope people would spend it rather than save it. So by reducing tax solely on spending rather than income it ensures the money only works to stimulate sales which was after all is what they?re trying to achieve.

 

Right I?ve just booked my holiday with all the vat I?m pocketing.

 

Enjoy the cold and the fog and see you all when I get back!

 

Bill

[Dizzy]

So....

 

Is everyone rushing out to the shops tomorrow to get their VAT discount but what discount are we actually getting

 

eg.... Tesco Direct says (and the same was happening in the stores this weekend as they introduced the cut early on some items). I never got mine though but couldn't be bothered to queue to question it after I'd actually realised.

 

All prices currently displayed on Tesco Direct include VAT at 17.5%. These prices will be automatically discounted at the checkout to be equivalent to the new 15% VAT prices. This means a discount of 2.13% on all items.

 

The total saving will be clearly shown on your receipt.

 

Why is this discount 2.13% and not 2.5%?

The example below illustrates how the discount is calculated:

A product selling for ?10 has a price (excluding VAT) of ?8.51

If you apply the new VAT rate of 15% to the price excluding VAT (?8.51), it gives the new price of ?9.79

The new VAT rate equates to a saving of ?0.21 (?10 - ?9.79 = ?0.21)

This equals the same as taking 2.13% (or 21p) off the original ?10 price.

 

2.13% I understand it but all in all I still think te VAT reduction is nothing more than a complete pain in the **** for businesses and waste of time for the normal shopper.