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In a routine pre-budget report that suddenly became “emergency economic measures”, Bushy Brows Darling played a game of high risk.
It is all very well lauding a 13 month 2.5% VAT cut, but at what cost does this come? Not everyone or every small business is IT literate enough to make the necessary change to their computers, tills or whatever. So the IT consultants will get double bubble. What about printed stationary, brochures all featuring the VAT rate? Adverts & catalogues? All needing reprinting.
For businesses doing VAT returns for periods across the change date over will cause added burden and cost. For a lot they struggle with the return when there is no change of rate.
Also for some the odd amount created by strictly applying the rate change will be just bizarre. If you had a rounded price with 17.5% VAT then the reduction will leave very strange amounts! Or do service suppliers round prices down and eat into profit, or round up and annoy people?
And as for the published consultation note from Treasury saying rate would be going back up to 18.5% - perhaps the cat (or VAT) is out of the bag!
Darling took back with NI and fuel hike, so the truth seems plain. The Government have mortgaged UK plc to the hilt in the hope of rising tax take in 12 months time.
Wasn’t it that sort of cavalier behaviour by our financial institutions that got us into this mess?
28 Nov 2008 12:09:24