Is Brown's political positioning VAT good?

liz Brown

of course Cameron couldn't commit on how he would vote on VAT - you don't sing and agreement when you haven't read the terms - that would be highly irresponsible

CPowell

Cutting VAT doesn't put money back in people's pockets. And people who have lost their jobs or fear that they might aren't going to go out and spend money they will need for hard times just to save £2.50 on something which costs £100 (net of VAT).

Slim Jim

His positioning on public spending reductions isn't particularly encouraging. He hasn't announced the scrapping of Trident replacement and dropping ID cards. Any cuts they do make will be cosmetic, (remember Gershon?) and will lead to charges of ''is that all?'' I may be surprised tomorrow though...Where's the money coming from? How much and how long will it take us to pay it back?

What really hacks me off though is the tone of this article. If true, then how narrowly partisan Brown is, and only fuels our suspicions that everything he does is done to remain in power and maintain a false image, more than the national interest.

Rhoda Klapp

DC only had to go here or to the Telegraph comments on the story to see he should oppose it, and find a good half-dozen reasons why. The fact that he doesn't know what to say does not bode well.

Slogans: GB is addicted to OPM.

He's borrowing on his Visa to pay off Mastercard. And you pay the bills on his Visa too.

oldtimer

It seems to me that Brown and co, and Labour MPs, sound much to sanguine about the future of the UK economy and the expected effectiveness of their remedies (to be announced tomorrow). It gives the impression, again, of political positioning.

The UK is in a deep mess - as posts by Short the UK on other recent threads has pointed out. We are in acute danger of (1) plunging into IMF bailout territory and (2) failing that, as the IMF is running short, into Brown`s banana republic.

It looks as if Brown and Darling have used every shot in the locker, and them some, in their bailout product. What do they do if/when? it does not work as advertised? We need to remember, from bitter experience, that Brown products emphatically do not do what it says on the tin.

Don

As good an explanation of why a vat cut will fail as any I have seen. Lifted from political betting.com

Why this VAT cut will not work. Thanks to political betting.com punter.

It was a week ago, on 16th November, that the Mail on Sunday heralded:

Browns £1,000 Christmas cash handout

Gordon Brown is planning a ‘Christmas bonus for taxpayers in an attempt to kickstart the flagging economy. The cash handout plan, which has been driven personally by the Prime Minister in the face of resistance from the Treasury, will be targeted at low-income groups.

Now, its a cut in VAT instead - but be warned:

The EU Directive on the common system of value added tax stipulates that, during the operational period of the transitional VAT arrangements (where the VAT rate is that of the country of destination and not that of the country of origin), the Member States shall apply a standard VAT rate of at least 15% [Directive 2006/112, last amended by Directive 2008/8].

In the UK, the standard rate of VAT is currently 17.5%

So do the maths:

This week-end, VAT on an item costing £1,000 is £148.94 - i.e. it has a net cost of £851.06.

If Darling reduces VAT to the minimum allowed by the EU (15%) that item will be priced at £851.06 + VAT of £127.66 = £978.72.

So, if youve already got £1,000 and are prepared to go out and spend it before Christmas, you will receive the equivalent of a cash handout of £21.28p!

So to get Browns £1,000 Christmas cash handout, you only have to spend £46,992.48 in the next four weeks or so.

Please dont clutter up the pavements outside Harrods with your sleeping bags.

Mark

I think if this proposal is true then it will turn out to be an expensive damp squib.

Rather than clog up the comments here with my rather elongated post, I have put my thoughts here:

http://markreckons.blogspot.com/2008/11/vats-not-way-to-do-it.html

gavin

The problem with a VAT cut is that there's no way of ensuring its passed on to customers. As it was stated VAT is a hidden tax that most people do not notice paying, so what's to stop retailers not cutting prices pocketing the difference? How will that boost spending

luke

Forget the politics for a moment. This is the best form of stimulus, so i support it.

I expect it will sit alongside some moves on lower paid tax as well.

Rex Burr

If people don't have cash to take advantage of a VAT cut they can always borrow it.
Most of the extra spending will go to China and will then be recycled back here as government borrowing.
If, as suggested, the VAT rate rises latter it will be closer to the average EU rate at the same time as the value of the Pound is closer to the value of the Euro and our rates of unemployment are converging. We are falling into line.

TGF UKIP

Is there anyone better than Ken Clarke on screwing up the Tory line.

It's probably a toss up who loves him more, me or Gordon.

John Page

Of Vat & banks

http://thepurplescorpion.blogspot.com/2008/11/of-vat-and-banks.html

TrevorsDen

Is this VAT thing really on the cards or is it smoke and mirrors?

I cannot believe that even this government are so stupid as to think that what this country needs right now is an extra £12 billion extra govt borrowing so it will be cheaper to buy imported plasma TV screens, jewellery and luxury clothing - etc.

There WILL be somewhere extra taxes (now and not in 24 months) on the people Brown alleges are well off (ie anyone likely to vote Tory) in order to fund this.

There is ABSOLUTELY NO WAY Brown will simply dole out tax concessions to the wealthy. There WILL BE more than just straight forward VAT reductions and it will be funded by the middle classes.

Of course in that case there will be no 'stimulus' toi the economy, but that is not what this is about. A real 'stimulus' would in any case be about directly supporting enterprise job creation and employment.

But the only job this package is designed to save is the Prime Ministers own.