The Pre-Budget Report

Discussion in 'Off-Topic Chat' started by johnmartin, Nov 24, 2008.

  1. johnmartin

    johnmartin Active Member

    Now, I'm no economist but I really don't see how dropping VAT and then upping duty on fuel, alcohol and smokes will guide this country out of recession.

    If the idea was to encourage people to spend their way out of recession then how does putting higher taxation on the things they spend most on help us. Probably because he's thinking that these are the "essentials" that people will not do without and so will spend on them anyway.

    The cut in VAT does nothing to the price of food, a basic essential, but the increase in fuel duty makes it more expensive for retailers who will eventually pass on that cost to us.
  2. BigHorn

    BigHorn Active Member

    A 2.5% cut inVAT actually only makes things just over 2% cheaper. When everybody is already cutting prices by 10%, 15% or 20% at the moment I don't see how the a 2% cut is going to entice everybody to go on a spending spree.
  3. StellaJohnson

    StellaJohnson Active Member

    Cheer up guys, it will soon be christmas, ho ho ho!
  4. Di B

    Di B Member

    It should help the small business in staying afloat a bit. Those that dont turnover enough to be vat registered so cant claim their vat back. Thats the only main benefit I can see.
  5. David Mann

    David Mann Member

    I can't see a retailer who charges £10 for an item suddenly charging £9.79. The statement seems to me to be more annoying than helpful. Right, over to the grumpy old rant room..
  6. KMJ Recordings

    KMJ Recordings Supporting Member

    Why does everybody seem to think that this is necessarily about the end user / consumer?
  7. BigHorn

    BigHorn Active Member

    Well it was the Government themselves who said that they hope companies will pass on the reductions as soon as possible. But Mr Mann has a very valid point. It will only be passed on for high price consumer goods. The end evertyhing with 99p practice will see to that.
  8. KMJ Recordings

    KMJ Recordings Supporting Member

    Companies pass on costs and reductions, yes, but not just to consumers....they also pass them on to other companies as Di B has already intimated....and there are a lot of small businesses that aren't vat registered....reducing their costs so that they can remain a viable business is key to maintaining the economic infrastructure of the country is it not? What happens if we get to the point where they all close their doors? The CBI has been expressing concerns over the high number of failures for months......where do the people go? What do they live on? Do they keep their houses?
  9. David Mann

    David Mann Member

    As a former owner of 2 small businesses,

    Where do the people go? We were lucky enough to be able to go back to our previous careers.
    Do they keep their houses? Just about.

    Although I wasn't impressed by the Chancellor's statement, I'm really glad I didn't have to make those decisions. Today's problems, I think, are a combination of over optimism - letting the bubble grow and then acting surprised when if bursts - and external factors such as oil and the US economy.
    As individuals and a nation we need to pay down our debts - but how to do it without harming the retail economy?
  10. hicks

    hicks Member

    Darling has made this VAT cut to "encourage consumer spending". Everyone knows in reality the reductions are negligible on most purchases. This will not encourage people to spend more, and will add about 12 billion to the National debt. We'll all pay for that in the coming years.
  11. johnmartin

    johnmartin Active Member

    Quite correct. I can't see anyone wavering over the purchase of a £500 LCD telly suddenly taking the plunge because they'll save £12.50 on the VAT. In fact, most retailers are not going to adjust all of their in store pricing just to cater for that. Most probably they'll swallow the saving themselves rather than pass it on. They already discount the cost of most consumer electrics by considerable margins anyway.
  12. Just Crazy

    Just Crazy Member

    I cant see retailer passing on the cut as the amount of work that needs to be done to have this in place by Monday, all that reticketing, not a quick job!
  13. WoodenFlugel

    WoodenFlugel Moderator Staff Member

    Does anyone else find it ironic that the Government's way out of a financial crisis caused by overspending and overborrowing, is to encourage more spending and increase our National Debt? :rolleyes:

    That said I wish I'd waited a few months before buying a new car....:mad:
  14. Bayerd

    Bayerd Active Member

    I don't think that by reducing VAT Darling's hoping that we'll all go out and get new tellies and sofas to keep the economy afloat. The way I saw it was that if the 2.5% cut is passed on, we'll all have an extra £10-20 ish to spend each month which is the sort of amount that's likely to go on extra time in the pub/cinema/restaurants etc.

    The fact that it was taken away by the other hand by increasing duty on fags, booze n fuel probably means I won't actually get that extra night in the pub each month.........
  15. tubafran

    tubafran Active Member

    but to save £10 to £20 on the reduce VAT you'd have to spend £400 to £800 a month. That's some spend on "luxury" items which is where VAT is supposed to be added - food, kids clothes, books etc all have zero VAT. I think energy bills also have a reduced VAT rate anyway - and I don't think they have been changed. Take you food and energy bills out your monthly spend, take your petrol bills out and you've got to be having one hell of a spend on goods to have a significant personal gain.

    Also bear in mind that companies who previously reclaimed some of their 17.5% Vat on petrol costs will now only be allowed to reclaim the 15% VAT so bottom line is that nett fuel costs will go up from Monday - we cant reclaim the duty that has been increased to maintain the cost. Agreed fuel bills have now come down but this revised tax structure means that like for like it will "cost" more.
    Last edited: Nov 26, 2008
  16. marksmith

    marksmith Active Member

    The Government missed the opportunity to tackle the energy companies yesterday, who are still supplying Gas and Electricity to us at inflated prices, whilst enjoying wholesale prices that have fallen dramatically. ( They got rid of the watchdog instead! )
    We allow corporate robbery in this country because so many politicians have personal interests in the business profits, through stocks/shares etc.
    Representation should include all economic groups. Might I just add that middle earners are the most put-upon section of society. Not one political party wishes to grasp that nettle.
    As a public servant in the education sector, I am tired of 2.5% rises and costs increasing by up to 50%. How do the figures add up to any sane person?
    I would never incite rebellion in our beloved country, but the winds are a-changing folks because we are all tiring of picking up the tab for inept decisions by this Labour Government.
    We don't complain enough, we just moan to those in the same situation. If you do demand to be heard, most agencies will initiate their p.c 'nil toleration' policy, to enable them to walk away, leaving you with your problems and them massaging their figures to reflect a low level of complaints!!! Great Britain? Bah humbug!
  17. stevetrom

    stevetrom Well-Known Member

    one change to a database - not a long job
  18. hicks

    hicks Member

    But price tags for items on the shelf include VAT.
  19. scotchgirl

    scotchgirl Active Member

    I happen to think that any reduction in VAT, even temporary, will be of benefit to me personally - especially just before Christmas (what with all the shopping to get in - presents). Hopefully the reductions will be brought in ASAP! I just wish it had happened about 2 months ago when we paid our builder! lol!
  20. scotchgirl

    scotchgirl Active Member

    However - Its just occurred to me that while the government seem to be saying 'spend your way out of the recession' and are trying to get us to part with our cash....wouldn't we all be doing that anyway, given that its Christmas I mean? Doesn't that give a false sense of 'everything being ok'....which could dissapate after Christmas, when we all go back to counting our pennies?

    Spot someone (me) who knows next to nothing about global economics.....