20% VAT on the way?

Discussion in 'Current Affairs, News and Analysis' started by jagman, Feb 13, 2010.

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  1. According to The Times-


    Regardless of who wins the election we are going to get 20% VAT
    Won't this just strangle growth a little more?
    When I run out of money I stop spending but it appears the proper thing to do is go and help myself to some more of everybody elses cash instead
  2. Well when reality bites something needs to be done, whether we like it or not the cost of living "will" get more expensive for some time to come.
  3. VAT will have to go to 20% just so that the next Government can recoup some of the Income Tax Revenue that'll be lost under the 50% rate that sent high earners packing.

    Problem is, is that many tiny little businesses like ours just can't pass that extra 2.5% on as the customers just won't pay it. The big companies in our field can swallow it up elsewhere, but we can't. So for the thousands of very small businesses the government might get and extra 2.5% in vat, but then they lose the same amount in Corporation tax as our margins shrink....

    so 20% vat sounds great on paper, but it'll have a big effect on very small businesses..
  4. Will it not also increase smuggling? We've seen it with tobacco and spirits, will this spread to other goods, especially high value electronics?
  5. IIRC, when Maggie reduced the 60% Income Tax rate to 40% the HMRC's income tax reciepts rose.......

    The less you tax people the less effort then goes into tax avoidance as it then costs them less to actually pay the tax than what can be saved from employing accountants to find ways to not..
  6. Like you I run a business, 2.5% is nothing to the 4.7% that my main supplier has just put on his goods, last year is was 3.4% so huge increases set against a stagnant economy and I have no option but to pass on the increases to my customers because I can't absorb that sort of increase. Fortunately I'm in the B2B market place so VAT increases can be reclaimed but they are still a drain on other cash-strapped businesses like the Pubs who are amongst my main customer group.
  7. Thats a valid point, However untill increased HR are implemented on the borders it's unlikely the smuggling will end soon,

    Anyway the gangs know which & when ports/areas to target within the UK & the HMCE have only limited resources in order to tackle the issue & the criminals are fully aware of this, thats the gamble their prepared to take, along with the sentence at HMP pleasure this will always carry on

    IMO: We'll see an increase of domestic/industrial crime, fuel theft etc etc.
  8. in_the_cheapseats

    in_the_cheapseats LE Moderator

    I think you are but I doubt if it is going to be that bad. as previous posters have said, the times ahead are going to be painful and the past maladministration needs to be paid for.....
  9. When the Vat rate went down to 15% 80% of our suppliers just used it to increase their margings and never actually passed the cut on. Which in reality is all that the abanks are doing with interest rates, in particular the semi-state owned ones. Rate are at0.5% and they have all increased their marginn so the averageborrower doesn't see any advantage and if you want to get onto a Tracker then you have to pay fee's in excess of £995 just to do so.

    State Sponsored Rip Off. At least Mr Mugabe is up front about it.
  10. It's not just smuggling you have to worry about, counterfeiting is also on the rise - and I don't mean just in luxury goods, e.g. the Guccis of this world. I'm talking about industry sectors where there is a real danger to health and safety, like pharmaceuticals and I have seen counterfeit brake pads and tyres for cars and spare parts for aircraft.
    Smuggling and counterfeit of high-end electronics - already there.
    And, increasingly we are seeing mixed loads of contraband and counterfeit products.
  11. I don't see the point in raising more tax revenue as this gang of incompetents will only give it away to Africa, India or even Greece!
  12. Smuggling, counterfeiting, and recently IT chip & Pin (according to reports) is 'not' quite as secure as we believe or have been informed, the web is a major source of criminal activity,

    A point to note: (I & other half (asian) visited Paris back in Nov 09 & apart from noticing many immigrants, we were approached by an asian female (after a 'very brief' discussion) was asked to purchase a 'very well known' designer handbag from a major designer label based on the left side of the champs de elysee, the offer was promptly refused as we knew full well what was going on)

    however my point is: these activities are/and will carry on regardless in most countries where there is supply & demand, counterfeiting is a booming business, whether it be currency or merchandise, very hard to reduce this trade.
  13. These are the facts of life in a "democratic" country where the unelected Prime Minister appoints a twice discraced crook,one Lord Mandleson of Backhander.

    Every time Cycops opens his mouth he gives away more money,then has the gall to state that the British public will be proud of however many billions this clown gave away to China in some climate change initiave.

    Thank fcuk I no longer live in Britain.

    As well as 20% VAT,I expect at least a 6 Pence/litre fuel increase and no doubt a wide range of further tax increases post the election.
  14. Wordsmith

    Wordsmith LE Book Reviewer

    Its to do with the structural deficit - i.e. that part of the spending we can't pay for. Most studies I have seen suggest we are spending 6% more than our average long term tax receipts.

    And this has been going on for a long time. Cyclops/Brown/that fecking ijit has been pushing up the deficit even in the good times (when he should have been piling up surpluses against the bad times).

    As 'Call me Dave" put it, the UK has maxed out its credit cards, and we now face the long and painful task of paying back all the money Cyclops airily blew because he's put an end to boom and bust.

    Whichever party gets in (and the Conservatives are the least worst option) is going to have to put up taxes and take an axe to public spending. We just can't afford to go on the way we are. Cyclops has actually got the public finances in a worse state than when we had to go cap in hand to the IMF in 1974.

    20% VAT is just the start of it, I'm afraid.

  15. You are misrepresenting the actuality there.

    As far as I know, the reason tax receipts rose was because of North Sea Oil, not because of increase in income tax receipts.