boxst

I'm a little confused. I read that the government want to cut VAT by 2.5%. On one hand that is great, but doesn't it leave a huge hole in the government's budget? Where is that money going to come from?

To me it just looks as though the government is going to be bankrupt sometime soon and if the Conservatives ever get in the first thing they are going to have to do is raise taxes...

Steve

GC8

Thats hardly a disincentive for the labour party, is it? Theyd love that: a tory government so saddled with their irresponsible debt that theyd still be struggling to make good when their first term was over. Theyd have a hell of a job being re-elected..... Win - win.

Matteeboy

Also - from a car point of view. Fuel has dropped hugely in price and so will the tax revenue on it. Add to that the near death of income from car sales and there must be a BIG hole in the budget.

They'll be encouraging up to drive Scoobies, Evos and big V8s again soon...

kingofturds

iTrader: (1)

expect a 5p a litre slapped on fuel at the next budget and why the hell is diesel 17 p a litre dearer than petrol at some places surely this is profiteering.

rossyboy

iTrader: (8)

and then you have less tax from North Sea oil, less stamp duty due to poor property sales and of course a good few billion lost from tax on banks profits that have turned to losses....

Frankly, we're shafted.

Leslie

They are going to borrow many billions to finance the tax cuts which will last for a short time, they will continue to throw the money they get from taxes and borrowing away on profligate and unnecessary government spending, and then we will get taxed very much more heavily than we are now later and for a very long time!

Les

Klaatu

I have a real issue with Govn't's using taxes to bail out private institutioins, and then the very same institutions sacking workers. That stinks!

Hanley

I think they're damned if they do and damned if they don't.

They need to do something to try and get the economy moving, I'm no labour fan but I'm glad I don't need to make them decisions.

J4CKO

iTrader: (1)

Too many in the financial sector have got massively rich by being crap and fooking things up, some accountability for this situation would be good, as a taxpayer who does no owe money and has savings its a kick in the bollocks the interest rates dropping , my tax money going to banks to replace what they have lost and given to massively overpaid and overrated bankers.

I remember a sign on Old street in London, massive bollboard with some bank crowing about its exploits, with some banker called "De Bloney" or something, sat there on the billboard looking smug and bankerish, I was in the city recently and the same billboard had no evidence of bankers congratulating themselves, how much must that have cost ? I suspect (though he may be perfectly innocent) Mr De Bloney is still living very nicely despite the current situation he helped create.

Klaatu

We have a 300 year old banking system, good old BoE, to thank for that. Making the "eilte" rich(er), at our exepense (as always).

We used to fight for what is right. Now it seems as long as the "chippy", "offy" are still open and "dead-enders" is on "de telly", no-one cares.

David Lock

I just don't see how a 2.5% cut in VAT is going to make any real difference. It doesn't apply to food or kid's stuff and it's no encouragement to retailers as they claim it back anyway.

Walk down any high street and it's awash with "half-price" or "25% off" signs so "2.5% off" is hardly going to set the shopping world alight.

Good business for printers though as every small business will have to have all their retail price lists re-printed

dl

dpb

Fankly i think theyre so deperate/short of ideas theyll try anything!, and LARGE steps as well

- which is surely bound to create the opposite result to that which is desired !

Mitchy260

Ive said it before, the benefits culture is bleeding the country dry.

Sort this out and they'll sort their financial problems.

Klaatu

Not to be confused with any corporate benefit culture (No! Not possible, surely?).

Matteeboy

Of course let's not forget that Hedge Funds and Private Equity firms were being charged 5-10% tax on BILLIONS in revenue and many escaped it completely.

Getting into bed with the super rich has helped our economy die. A lot of well known UK companies have been bought and stripped apart by US Private Equity. The efficiency goes up, so does the value of the company and the profits to the partners - but the staff get naff all benefit.

A terrible state of affairs.

Don't blame state benefits - blame pi55 taking corporations.

ditchmyster

iTrader: (7)

The current situation stems from short term profiteering in the form of performance led bonuses and stock market share prices, it's all part of the "I WANT IT ALL NOW" culture that has developed over the last few years.
You can't just magic money out of thin air by juggling the system sooner or later the gravy train has to come into the station, and boy did it hit the buffers hard

PaulC72

As much as I dislike the labour way they need ot do somehting and I actually think they are trying to fix something, maybe because they have created the problem over the last 10 years maybe not either way enjoy the savings now because whatever happens we will be in for the reverse at some stage and have to pay it all back + more!
I for one cannot see a solution to the whole problem but it has to try to be solved by doing something and this is the only thing that can really be done to encourage spending, lets just hope we don't see the 14% mortgage rates of old when it has been kickstarted again.

davyboy

Cutting VAT is going to do nothing. A 2.5% reduction on anything is not going to make me buy it.

It annoys me they are saying they will reduce tax now, but we must pay later. What the hell have they been doing with the windfall taxes they have been getting?

Stamp duty for the last 10 years
Petrol price increase, increase in VAT
I'm sure there are others.

Were they expecting these massive payments to go on for ever? It's that extra cash that should have been used to help the economy. NOT further increases in 2 years.

They need to lean their structure, get rid of staff who are paid for doing nothing. No doubt lazy overpaid local government employees will still have jobs during this time.

dpb

Unfornatley it was the last government who taught these monkeys .!


Sadly they havnt the nouce to break free

lordretsudo

The thought of what's going to happen with taxes in the coming years as a result of all this borrowing is enough to make anyone feel more than a little nervous, I would have thought.

The mooted 2.5% cut in VAT is going to cost around £11 billion apparently, yet the impact it will have on an individual's spending power is insignificant - if one were to spend £10,000 in a year on VAT-rated goods and services, one would benefit by £250. I seriously doubt that this is going to affect people's spending habits. I guess the government feel that they need to appear to be doing something, anything, rather than just sitting back and watching things spiral out of control.

The thing that always gets me when Brown is berating Cameron over the need to increase public spending and cut taxes in the short term, he always goes on about how other countries are all agreed on the need for these measures. What he doesn't mention is that they're all (with the possible exception of the US, which is a different case anyway due to its sheer size) in a much better position than us to do this, given that they don't have our huge deficit caused by profligate, wasteful government spending. I can't understand why Cameron doesn't make more of this. Generally speaking, the performance of the tories has been pretty woeful over the last few weeks IMO.

PeteBrant

So cutting all benefits, to what, zero will solve the problem?

Now, I am assuming you are going to exempt pensions from that, so that leaves about £70billion.

Now, given that this so far we have had to guarantee about £300billion , not to mention the NR bail out, and in all likely hood this is going to rise, do you not think that just cutting benefits to zero is a bit of a red herring?

Aside from the fact of all the people you put into immediate danger of dying over the winter, obviously.


See the thing is, fiscal stimulation has been given as the solution by the 20 leading economies. So assuming we all know better. What would you do to solve the problem?

Matteeboy

Encourage more poor people to get into more debt.

Brilliant idea...

apples24

iTrader: (1)

so the gov owns a great percentage of some of the banks, surely they can sell that off at a later date for a profit?

robby

so with the 2.5% cut what happens?

if i went into a shop to buy a new TV for example, it currently has a price of £400 - would they reprice all items in the shop as soon as the tax cut is announced or would they discount the TV when i get to the till?

or does it apply to products the shops have bought in after the tax cut?

i'm also looking to buy a used car from a garage - should i expect 2.5% to be knocked off next week or does it not apply to used "items" even though the dealer is vat registered?

confusing

PaulC72

I don't think you pay VAT on a used car as it is paid on the initial new purchase only AFAIK

Not sure what would happen in shops but i imagine a few wouldn't pass the savings on

OllyK

Exactly what happened back in the 60's / 70's.

Jimpreza

VAT is paid on the profit of a used car.

davyboy

Oh god , I'm going to get taxed more.

If you earn 150k or more expect income tax to be 45%