Ash UK/US

Brown it talking about cutting VAT from 17p down to 12.5p to encourage consumers back into the stores... I don't EVER remember them cutting VAT, I remember when it went from 15p to 17p.

Will be interesting to see if it happens.

Norri

Just to be pedantic it is 17.5%.
Sadly I can recall when it was 12.5% before.
It is an interesting concept to stimulate the economy without sending out cheques or bankrolling financial institutions and could be enacted very simply.

Ash UK/US

Octang Frye

I don't know what to say. Ooooh! I'm being ass-raped a little less.
Thank you, kind sir.

Norri

My pleasure, Take the time to try and heal.

Octang Frye

I just read an article where it says the VAT cut would "cost" 29 billion, but would "pay for itself" as it would get more people buying in stores.

If it pays for itself, why does the tax have to be 17.5% in the first place?...

Norri

The CEBR called for VAT to bet cut from 17.5pc to 12.5pc until the end of 2009. While the gross cost to the Treasury would be £24bn, the net cost might prove far lower if it helps prevent a devastating recession that would eat into tax revenue in any case. "It will pay for itself to a crucial extent," said Mc Williams.

The EU's VAT Directive sets a lower limit of 15pc for all member states, but it allows for a temporary cut under "certain conditions"Brussels is unlikely to object strenuously at this stage.

It seems to me that they are not saying that a 12.5% tax will pay for itself, but that the stimulus created will more than offset other potential losses.

The UK VAT rate is I think, the lowest in Europe and unchanged for many years.

BritishGuy36

Because it only pays for itself in certain circumstances, such as the ones currently being experienced, where everyone is tightening their belts.

If there is an item you want, and you have plenty of money, you will buy it whether it costs £112.50 or £117.50. If it costs £117.50 and you have £112.50, you don't buy it. So if the VAT is lowered and as a result it now costs £112.50, you will buy it. The government now has £12.50 of the £112.50 rather than nothing, had the item still been priced at £117.50.

That may be an oversimplification, but hopefully you get the point.

BritishGuy36

Not by a long way, but there are more that are higher, than lower.

http://www.scopulus.co.uk/taxsheets/..._vat_rates.htm

OiOi

Benefits have to be paid to families who have moved to other countries in the EU, they don't get chance to shop UK stores.

Brit3964

For those who remember it, Mrs T originally changed the rate from 15% to 17.5% in the budget in 1979.

garrettciaran

Mr Brown still owes us from the 10p Tax Band he never paid us back for, he said " we will re-imburse the loss" Hmmmmm.

The British public have long memories, and politicians have short ones, it seems.