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Yay! I'm feeling richer! NOT!
Former Member
Posts: 1,876,323 The Mix Honorary Guru
So, will Alastair Darling's cut of 2.5% on VAT entice you to spend? Or has the government missed an opportunity here? I understand that most businesses don't think that repricing their items to reflect the measly VAT reduction, is worth their while so prices won't change that much anyway.
I think this Labour government has f***ed us all over for years to come. :banghead:
I think this Labour government has f***ed us all over for years to come. :banghead:
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Overall though, if the aim of this was to boost spending in the short term against a long term increase in taxes then it's the most pointless attempt I've ever seen.
I'm with the Lib Dems, oddly, if you want people to feel better off and start spending you put more money in their pockets through a change to income tax, you don't slightly reduce the price of expensive items no one can afford in a few months time...
It's also useless for lower income families, since most essentials aren't even covered by VAT. I'm really surprised that there was a major increase in the number of items that are VAT exempt.
All in all seems like one hell of a missed effort. Looks like the aim was to increase business revenue rather than actually encourage people to start spending again.
I mean, look at crude oil. Price of a barrel has dropped by 60% or something daft. Price of petrol at pumps has dropped by what, 10%? I would have agreed with the lib dems as well - tax cuts for those on lower incomes (who statistically spend more of their income because they can't really afford to save - giving tax breaks to rich people means they put even MORE in their savings account, which is great for them but bad for the economy).
Though one could argue increased business revenue is part of the house and firms model so in the end it has the same effect. Except it will be more evenly distributed and so a greater proportion will go into buying gold and stuff like that
Oil is purchased in futures so the oil being consumed today was bought at a difference price than what it currently is.
That is Keynesian nonsense. Savings drive investment which affects output. Diverting prodution to only consumer goods in the short term will just prolong a recession.
I believe you need a healthy level of government intervention to ensure the welfare and prosperity of people, not just growth and good levels of inflation.
Now all I have to do is persuade you that the human race is becoming more stupid each day, and my work will be complete.
Maybe, but mine's prettier!
Goods prices in the shops are falling anyway, deflation is entirely possible, so what you want is more people with more money, not lower prices by a tiny amount.
They should have used the money to up the amount you can earn before paying tax, that way the poorest would feel the most benefit, and everyone would feel a bit better off.
What? I wasn't talking about ther merits of intervention but the determinant of growth and job creation.