That's fucking stupid

Posts Tagged ‘tax’

The UK VAT rate is to be temporarily lowered to 15% for a year in the hope of stimulating the economy.

Now, this is being marketed at the majority of the population in the hope that they buy a little bit more and so pump a little bit more cash around the economy (basic Keynesian stuff: spend more, save less, improve growth). So, a quick summary of what you as consumers will experience from this exciting new policy:

(drum roll)

…er… nothing.

Food, books, children’s clothes, public transport, gas, electricity, water rates, new-build houses, financial services and postage stamps (amongst a host of other essentials) are not liable for VAT. So no chance of a discount there, then.

And, should a business deign to pass on that discount at all, taxable goods and services will have up to an astonishing two-point-one-something percent discounted. Well, spank me sideways and call me Mary. Imagine what you could buy with all that spare cash!

So we’ve worked out that the end consumer is no better off. And because this little bit of tax massage clearly isn’t going to make a dent on economic growth (especially because a considerable chunk of savings will have been spent on a frantic week paying IT consultants to reprogram accounting software), we can all assume that it’s not going to start paying off national debt any time soon.

Which is just fabulous, seeing as UK.gov is going to be borrowing more heavily than ever before in the upcoming year. Even this lifelong liberal has realised that long-term prudence far outweighs short-term pandering.

Or maybe I’m wrong. Maybe this is in fact aimed at those poor unemployed City bankers so they can get a tenner off their next Armani suit? Time will tell.