VAT going back down?

[Mario149]

Just read this: http://www.bbc.co.uk/news/business-16154965

Vicky Redwood said:

"There is still a lingering risk that inflation picks up again in December, but come January - when the VAT rise drops out - it should start to fall like a stone.

Is VAT going back down in the New Year?

[cloggy]

No, it drops out of the inflation figures.

[andymadmak]

No I think it means that the rise to 20% will no longer fall into the calculations for the inflation rate

[ralphrj]

No. Prices have increased in 2011 as VAT is higher now than it was a year ago.

In January inflation will be calculated on prices in 2012 against prices in 2011 that both include VAT at 20%. Therefore, there will be no inflationary increase due to a change in VAT.

[mondeoman]

Mario149 said:

Just read this: http://www.bbc.co.uk/news/business-16154965

Vicky Redwood said:

"There is still a lingering risk that inflation picks up again in December, but come January - when the VAT rise drops out - it should start to fall like a stone.

Is VAT going back down in the New Year?

How can inflation fall like a stone when prices are rising like a rocket???

[thinfourth2]

mondeoman said:

How can inflation fall like a stone when prices are rising like a rocket???

Would sir like his smart phone boiled or fryed


Electrical items are added which are expensive when introduced and quickly drop in price

DVD players used to cost hundreds you can now buy one for 20 quid but they taste terrible

[12gauge]

mondeoman said:

How can inflation fall like a stone when prices are rising like a rocket???

Its the BBC.

[Puggit]

VAT won't go down - 20% is more akin to our EU 'friends'

http://en.wikipedia.org/wiki/Tax_rates_of_Europe

[Digga]

Puggit said:

VAT won't go down - 20% is more akin to our EU 'friends'

Never say never. Over time, it;s up and down like a we's drawers.

[DSM2]

Digga said:

Puggit said:

VAT won't go down - 20% is more akin to our EU 'friends'

Never say never. Over time, it;s up and down like a we's drawers.

When was that then? The basic rate has never gone down, other than in 2010 because of the financial crisis, as far as I can see.

[Digga]

DSM2 said:

Digga said:

Puggit said:

VAT won't go down - 20% is more akin to our EU 'friends'

Never say never. Over time, it;s up and down like a we's drawers.

When was that then? The basic rate has never gone down, other than in 2010 because of the financial crisis, as far as I can see.

You're right, it's only ever moved one way.

Technically, it could go down but I guess governments get addicted to the cash it generates!

[anonymous-user]

Instead of all the QE bullst would a slash in the VAT rate to 12% not have been better? Of what I can see we are still in a bloody big mess & will likely still be in one for many many years to come.

[Digga]

Dave_ST220 said:

Instead of all the QE bullst would a slash in the VAT rate to 12% not have been better? Of what I can see we are still in a bloody big mess & will likely still be in one for many many years to come.

Personally i think not.

VAT is pretty neutral as far as businesses are concerned - you can claim it back on purchases (investment) - so it's only really personal spending that it impacts, and since most poeple are buying more crap than they need, with money they don't have, encouraging that side of things isn't priority.

Now a cut in corporation tax rates, or a drop in income tax for the lowest paid, well those are more like it.

[anonymous-user]

I'm not so sure. Retail is where the £££ should be coming from surely? Joe public can't claim back the VAT on anything he buys. I reckon people would be less inclined to cut back if suddenly prices dropped by a half decent margin, they would of course know that any drop in the rate would not be permanent.
Sales dropped off a cliff this week for us compared to last year(thankfully the rest of the year has been better than last).

Not looking forward to 2012 TBH.

[Digga]

Dave_ST220 said:

I'm not so sure. Retail is where the £££ should be coming from surely?

Not if there's debt involved though.

If your borrowing to fund an asset that enhances productivity - thereby profitability - then that's an investment and all is well, but just for consumption (especially when many consumer goods are not produced domestically) it's less beneficial in the long run.

On the flip side, if corp tax were lowered, that would undoubtedly have some positive knock-on for employment and wages and therefore consumers. If we raised tax thresholds, then that too would filter into the consumer economy.

[anonymous-user]

Good point. What was needed was some big rate hikes to clear the st out(well, what was needed was rate rises to cool off the boom that should never have happened like it did, a house doubling in value in 12 months? Was always going to end badly).

TBH whatever way you look at things it doesn't look rosey.