VAT Cut to 15%...

I am writing this post a few hours before the Chancellor stands up to give us his pre-budget briefing.

The speculation in the newspapers over the weekend has been rife that VAT could be cut by 2.5% to 15%.

As I understand it, this is part of the Government strategy to stimulate the economy and breathe some life into consumer confidence particularly with Christmas approaching. To be able to do this, it would probably have to take effect from December 1st.

Now I write this without knowing what is being proposed (it is possible it won’t happen at all) and how it’s going to be implemented and for that matter when. Nevertheless, I have a horrible feeling that this could all end in tears. A cut in VAT in the way intended may well benefit the man/woman in the high street, (and I do say may because I am not 100% convinced), but the implications for business generally could be horrible.

The administration involved in changing computer systems, stationery, tills, invoicing methods etc could be a bureaucratic nightmare. There are also other issues that may be affected like VAT on fuel scale charges, VAT margin schemes and other issues. Additionally, for those in the middle of a VAT quarter, which could in theory be as many as two thirds of businesses, its going to make the VAT Return calculations very interesting.

Anyway as I say, this is a “gut reaction” post but it won’t be the first time the Government has snatched defeat from the hands of victory. The turnaround on the 10% tax rate a few months ago caused similar problems with PAYE codes and computer systems.

I am posting this on a number of sites as I am interested for reaction although by the time it sees light of day, it may well be that I will be eating my words.

VAT decrease - benefit to who?

The recent VAT decrease from 17.5% to 15% seems to be wrongly focused.

If people do go out and start to spend more, that money will be spent on goods from abroad and helping overseas manufacturing companies as opposed to supporting "made in England" products and English people.

The £15 billion or so could be better spent by reducing employment costs and therefore increasing the number of jobs, or providing funding for English companies; helping them promote their goods and services.

What action can we take?

Where there is an option, buy something made in England - it might be slightly more expensive, but will be of a better quality, last longer, be of greater value as well as giving you the satisfacation of knowing that you are making a direct contribution to a local company.

brian@theenglishstore.co.uk
http://www.theenglishstore.co.uk/

Re : VAT Cut to 15%

A classic case of more stupidity from Brown and the civil service and failing to realise how things work in the REAL WORLD.

If they wanted to help small businesses like they keep going on about, then why introduce something like a small vat cut that causes a massive headache, has precious little impact on stimulating spending and basically causes more hassle than its worth?

Labour are so out of touch with the real world and what happens in it that, frankly, it is scary.