VAT increase

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Thu 13 May 2010 09:48
VAT increase - nick62

Given a lot of political commentators are predicting a VAT rise to at least 20% within a year, what has the BR community got to say about the effect this will have on motoring, as this increase is reflected in higher fuel prices and the cost of new vehicles?

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Thu 13 May 2010 17:47
VAT increase - Honestjohn

I think they have to raise it to 20%. But government statistics show that car use is already down and this will reduce it still further. The Brown school of thought was to keep pumping money into the economy until it recovered. The Osborne thinking is start paying back the huge debt. But this will put a lot of people out of work and will reduce consumer spending.

HJ

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Fri 14 May 2010 00:15
VAT increase - AlanGowdy

This is only one of many necessary but unpopular measures that will be introduced over the coming months. Watching the TV coverage of the post-election shenanigans I got the distinct feeling that the battle weary Labour party was less than heartbroken that it will not have to implement the measures and see its popularity sink even further.

Edited by AlanGowdy on 14/05/2010 at 00:20

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Fri 14 May 2010 00:21
VAT increase - Rattle

I have studied a bit about fiscial policies many years ago at college and the school of thought we were taught is that many public sector jobs are not needed for society to function but by over employing on the public sector it keeps a lot of people healthy and in work and not claiming the dole.

By cutting back a lot of public sector jobs now the government risks not only bringing the UK back into recession but also creating a damaged society. I am thinking of what happened after 1979 for some random reason (I wonder why?).

I realise there needs to be cuts and I support the balancing of fuel taxes and the increase of VAT (even though it will hurt my business) but I think that will have less damage to my business than savage cuts in the public sector.

I also support the abolishment of tax credits in favour or no tax until you earn £10k. It will reduce the costs of the admin involved in the current tax credit system.

If I was at number ten I would simply want to reduce the power of the state while making sure everybody who is entitled to help gets it but in a much simpler way. I would cut all the red tape.

I would also introduce a german car tax where all german imports attract a 10% extra fee.

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Fri 14 May 2010 00:32
VAT increase - AlanGowdy

I would also introduce a german car tax where all german imports attract a 10% extra fee.

An interesting proposal, but the rationale escapes me.

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Fri 14 May 2010 00:37
VAT increase - Rattle

Simple, most german cars are more expensive than others (although with VW are quite cheap now).

It was of course tongue in cheek as such a proposal would be ilegal under EU laws.

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Fri 14 May 2010 00:36
VAT increase - eustace

One of the big mistakes made by all western governments during the recession was to bail out the banks with public money. The public will be paying for this for years to come. This decision was made because these governments believed that capitalism as a system should be protected at all costs. By making this decision, they defeated the very essence of capitalism, of allowing free markets to operate and to allow businesses that made unsustainable losses to sink.

What the governments should ideally have done was to take-over just one bank and use that bank to prop up the banking system and credit markets. So for e.g., the British government could have used Northern Rock to ensure that viable businneses get the credit they needed and that credit worthy mortgagees and borrowers keep getting access to the funds they needed. This would have allowed the banks which racked up large losses to fail, without affecting the wider economy.

This would have helped the government avoid racking up the kind of public debts that have been created and then letting banks go back to the merry old ways of big bonuses and big risks.

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Fri 14 May 2010 07:35
VAT increase - madf

This would have helped the government avoid racking up the kind of public debts that have been created and then letting banks go back to the merry old ways of big bonuses and big risks.

The notion that the rescing of the banking crisis on its own is resposnble for our debts is risible.

We have stopped bailing them out and our annual deficit is over £150 billion a year.. And as Financial Services contribute 30% of all Government Revenue, letting the banks go bust would have been an original way to reduce the deficit.

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Fri 14 May 2010 10:01
VAT increase - Honestjohn

Today, despite a state of civil war in Bangkok, the Thai baht stands at 47 against the pound sterling, compared to 75 a couple of years ago. Some reasons why the baht is strong and sterling is weak is that Thailand is not heavily in debt to the rest of the world, Thailand has quite a strong economy with high economic growth, Thailand has a export surplus (rice, vehicles, clothing), Thai salaries are low (a Bangkok policewoman gets £140 a month, a carworker gets about £300 a month, an agricultural labourer gets £3 a day), and Thailand does not support millions of people who do not or cannot work with high level benefits. As Rattle pointed out, in the UK, 50% of the working population work directly or indirectly for the government, most of them doing jobs that do not benefit anyone apart from the internal economy by keeping them employed. (In Scotland it's 65%.) That was Gordon Brown's legacy. The country does not earn enough to pay for that and we can't afford it, just as Greece, Spain and Portugal could not afford it.

That said, the weak pound is an excellent opportunity to export, but only if UK wages and salaries are sufficiently low to make sense.

If a Thai car worker gets £300 a month and a UK car worker gets £2,000 a month, even after the 40% fall in sterling v/s the baht, the labour element of the car is much more expensive in the UK than in Thailand. Or India. Or China.

HJ

Edited by Honestjohn on 14/05/2010 at 10:05

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Fri 14 May 2010 11:08
VAT increase - Sofa Spud

It seems that with the new coalition government more people are accepting that tax rises are inevitable and agree they are necessary.

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Fri 14 May 2010 11:45
VAT increase - nick62

It seems that with the new coalition government more people are accepting that tax rises are inevitable and agree they are necessary.

Well if the majority of voters elected the incumbents (36% + 23%), they haven't got much to squeal about have they?

It reminds me of when Thatcher was becoming unpopular in the early 80's (until we had the Falklands War), I seem to remember a lot of people compalining the "they had not voted for her"! Well somebody must have done.

Edited by nick62 on 14/05/2010 at 11:47

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Fri 14 May 2010 20:28
VAT increase - Honestjohn

Sorry, people. I share the guilt for this. But we must return to motoring and motor-related in this thread.

HJ

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