VAT cut

[Egbert]

Will the proposed reduction in VAT, which apparently would save you ?5 on a ?100 purchase, make any difference to people's spending habits?

I think not. People who spend ?100 would have done so anyway, so the Treasury simply loses ?5.

Quite frankly, if VAT was abolished completely, I doubt if it would make much difference to spending habits.

[P J]

VAT is the only tax set by the E.U. and is limited to a minimum of 15% for all E.U. Countries so abolishing it is not an option.

[Paul Kennedy]

Will the proposed reduction in VAT, which apparently would save you ?5 on a ?100 purchase, make any difference to people's spending habits?

I think not. People who spend ?100 would have done so anyway, so the Treasury simply loses ?5.

Quite frankly, if VAT was abolished completely, I doubt if it would make much difference to spending habits.

 

?2.50

 

And no it won't make much dfference.

[Paul Kennedy]

Trevor Kavanagh in today's The Sun, sums it up:

 

"If you?re deep in debt, scared of the sack and watching your miserable pension pot evaporate, will you celebrate with a bottle of wine tonight to save 15p? Or splash out ?500 on a plasma TV to save ?12.50? If you?ve got ?12,000 in a building society, will you keep it there or save ?225 on a new car? Probably not, especially when you?re going to have to pay it all back later, with interest."

[wolfie]

You don't read The Sun do you?

[Egbert]

VAT is the only tax set by the E.U. and is limited to a minimum of 15% for all E.U. Countries so abolishing it is not an option.

 

I can think of a very good option!

[Horace]

I don't think I am being particularly cynical in suggesting that the VAT cut (and all the other rumoured measures, including higher rate tax for the wealthy) are more to do with winning the next election than solving the economic situation.

[Paul Kennedy]

You don't read The Sun do you?

 

Not normally

 

but the bit I quoted was a link on another website I was looking at

[observer]

Can't see how 2.5p in the ?1 will make any difference at all?!

[asperity]

But stopping payments to the corrupt EUSSR would save us billions

[Dizzy]

The VAT cut wont make any difference to my spending habits whatsoever.

 

Like I said yesterday under another topic, I'd rather pay the extra little bit in normal VAT now on the purchases I make rather than to wait to be hit with huge increases in two years time when they need their money back.

 

But then again I do tend to spend within my means and I don't waste or spend money that I haven't actually got... which is not something that the Government likes to hear

[observer]

With Gov borrowing at unprecendented levels, we'll not avoid the tax back OR major cuts in Gov spending = cuts in public services - so folk need to be looking for the least worse options. The Yanks are in the same boat, with a $8.7trillion deficit; which will take two generations to pay back in higher taxes.

[Dizzy]

Silly question but....

 

I presume that ALL businesses / people who are VAT registered will also have to change their VAT rate to 15% from 1 December too?

 

Now correct me if I'm wrong but wont small businesses actually be worse off

[observer]

Nope, cos the VAT is paid to the EU as a tax, he'll still have his profit margin - give unto Ceasare what is Ceasare's and all that.

[Egbert]

One way small businesses will be worse off (if they are shopkeepers, anyway) is that they will have to reprice everything in the shop by Monday. Something they would rather not have to do at what is probably their busiest time of the year!

[Paul Kennedy]

Silly question but....

 

I presume that ALL businesses / people who are VAT registered will also have to change their VAT rate to 15% from 1 December too?

 

Now correct me if I'm wrong but wont small businesses actually be worse off

 

The only small businesses that will be worse off will be those who pay VAT using the flat rate scheme, that is unless the rate is also reduced. Small businesses that are not VAT registered should see some of their costs fall a little. I sense those business who sell to the public and whose prices are shown inclusive of VAT are likely to keep their prices the same and pocket the difference.

 

Personally I'm not convinced that this small reduction in VAT will have the stimulus effect that the Government believe it will have. In order to save 2.5p in the ?1, you still have to spend 97.5p

[Evil Sid]

oh goody, reprice all the items on the shelves, more work for sid

 

not to mention the poor manager who has to change all the prices at the till so that they scan at the new price, yippeee

 

one downer is that i will now have to change my travel expense forms so that the new figure for vat is charged automatically.

[Legion]

its only the samll business that will profit by it in my opinion.

 

lets face it, freds butchers selling bacon at ?1.20 for 100g arnt going to knock 3p off the bacon, they are just going to have to pay 3p less vat on their accounts, we will pay the same.

 

maybe the large supermarkets may pass on the savings, and in which case we will all benefit from this possitive step.

 

I don't think its far enough...in fact I don't think its attacking the correct area at all but everyone is complaining the fact its only 2.5p in the pound, well I think it will make a diffrence, because my family and I spend about ?2000 a month across the board on VAT chargeable items, so thats a saving of ?50.

 

however it wont encourage me to go and blow ?50 on something frivolus, it will just bring my fuel costs back to where they were a little while ago.

 

this is what needs reviewing, gas, electric, bank charges,council tax, mortgages for overpriced houses,tv licenses (should be abolished we pretty much all pay subscriptions now). its the bills that are taking away are ability to spend.

 

I tell you why this is happening now, they know that spending will increase dramaticaly over the next couple of weeks (I wonder why) of course darling will put it all down to his shrewed manouvering...

 

unfortunately the money being spent will not be this extra 2.5% it will be credit cards that we will find ourselves (as a nation) defaulting on in 6 months time when we are all loosing our jobs. plunging us futher into national bancruptcy.

 

bring back hanging is what I say ! /nothing to do with the subject but you may as well throw it into a rant at any opertunity.

[Dizzy]

From the the HMRC's web site 'help document' on the VAT change....

 

4.1.3 Do I have to pass on the VAT reduction to my customers by reducing my prices?

The Government is making this change as part of a broader package of fiscal measures to give the economy a boost. Passing on the tax reduction through reduced prices will stimulate consumer spending and mean that both businesses and consumers benefit from this change. But ultimately decisions on prices charged by business and paid by consumers, are for them rather than the Government.

 

 

Full document is here for anyone with a small business who does their own VAT and wants to know how to implement the change...

 

http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf

 

Sounds like a bit of a nightmare

[Bill]

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!

 

Well the way I see it is that reducing Vat is a pretty fair way of effectively giving everyone an unplanned 2.5% pay rise or bonus. Ok well? all end up paying it back in the long run but desperate times call for desperate measures and at least vat affects everyone including the lower paid and unemployed. Maybe it?s not a perfect solution, but I personally can?t think of a better way of giving the economy a bit of a boost, but then again I?m no expert.

 

In terms of small businesses benefiting, well maybe some will so good luck to them especially if it helps keep them in business. But for businesses such as mine where prices are exclusive of vat then there?s nothing in it for me except the end price of my products to the customer are reduced slightly.

The annoying thing is that only last month I issued annual vat schedules for all my customers that now by law all have to be completely redone. Buggar!

 

Bill

[observer]

.... and after the next election VAT will probably increase to 18.5% or more!

[Bill]

My understanding is that it will either return to 17.5% or more likely 20% after 12 months and this point had been officially stated (albeit loosely!)

 

Bill

[observer]

The leaked option was 18.5%; but either way it's sure to go up!

[Legion]

a fairer way to ensure everybody benefited would have been a reduction in income tax, in this position only business owners can choose whether we benefit or not.

well working people would anyway..

 

My understanding is that it will either return to 17.5% or more likely 20% after 12 months and this point had been officially stated (albeit loosely!)

 

Bill

 

just more evidence of ill thought out, irrational, jump around, idotic govorning.

 

because while quite clearly the companies/bosses/wealthy bonus earning execs who choose not to pass on the savings to us will benefit an extra 2.5% on all their sales...good for the company short term (maybe), but when it goes up again by an extra 5% to offset this, these &%^&^% will not say oh well it was a good run, they will pass it on to us, effectively a true VAT increae to 22.5% in real terms.

 

this government feed us flannel, most of the "I'm a celebrity" watching, "I care about what russel brand says on a radio show I dont listen too", keep me in the dark and feed me crap like a mushroom, dumb downed nation will accept this at face value, which is what blair/brown/labour rely on.

 

but anyone who bothers to spend 10 seconds thinking about things can see right through this absolute shambolic disgrace that they will then pass on to whatever poor sods have to realy fix after the next general election... they should have been out ten years ago!

[observer]

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%.