VAT cut for UK made products?

[clarkey328is]

Just an idea;
Does anyone think it would be a good idea to cut VAT for products manufactured in the UK? The cut should, in theory, be made up for by extra manufacturing jobs it should produce.
It would help get the unemployment rate and make us more independent and thus less susceptible to fluctuations in the global economy.
Any thoughts on this?

[Puggit]

It's a good idea, but the EU, amongst others, won't allow it

[craigjm]

Good idea but wouldn't be allowed by the EU as it would be seen as a form of protectionism

[clarkey328is]

So we can do it in about 6 months then, right?

[steviegunn]

clarkey328is said:

So we can do it in about 6 months then, right?

Then the WTO will be the one blocking it instead of the EU.

[Eric Mc]

Define what you mean by "UK made".

[anonymous-user]

not allowed. on the other hand the currency has effectively done the same thing since 2008

[clarkey328is]

steviegunn said:

clarkey328is said:

So we can do it in about 6 months then, right?

Then the WTO will be the one blocking it instead of the EU.

Perhaps it could be structured in a slightly different way from a VAT cut then, such as a government subsidy. I'm sure other countries must do this?

[clarkey328is]

Eric Mc said:

Define what you mean by "UK made".

Do you mean what proportion of the product has to be made in the UK, or just assembled here? I would say that some sort of meaningful assembly would have to happen here, not just packaging and that sort of thing. Perhaps there could be a sliding scale to account for the proportion of production that takes place in the UK.

[martin84]

VAT cut on all things we make? I'm not sure a vat cut on chlamydia is going to solve our problems.

[Happy82]

Ending business rates would be the best way of encouraging private sector growth, it's a huge waste of money that would be better spent by the business.

[king arthur]

A cut in employer's NI would amount to almost the same thing and would be completely legal.

[Puggit]

clarkey328is said:

steviegunn said:

clarkey328is said:

So we can do it in about 6 months then, right?

Then the WTO will be the one blocking it instead of the EU.

Perhaps it could be structured in a slightly different way from a VAT cut then, such as a government subsidy. I'm sure other countries must do this?

Guess what's also illegal under EU law? Of course, we are the only idiots to apply the letter of the law...

[hornet]

Even if it were legal, you'd need a whole extra level of officialdom to a) decide what qualifies and b) check the rules are being adhered to. Any benefit at the business end would be swallowed by the extra administrative costs, which would presumably have to come from taxation somewhere. Business would presumably need some sort of dual VAT registration as well, as you'd have any number of combinations. You could buy locally but sell internationally for example, so would you need differing input and output VAT registration?

[12gauge]

Nope, id rather a cut in production rather than consumption taxes.

Just get rid of all payroll taxes for any manufacturers that set up shop.

I think a UK specific VAT cut would be seen as protectionism. While theres nothing wrong with that, I think there are better ways of attracting investment.

[davepoth]

12gauge said:

Nope, id rather a cut in production rather than consumption taxes.

Just get rid of all payroll taxes for any manufacturers that set up shop.

I think a UK specific VAT cut would be seen as protectionism. While theres nothing wrong with that, I think there are better ways of attracting investment.

And in fact, selling things in the UK isn't what we need to do - it's getting our wares into foreign markets that will help. Tax cuts on production, like business rates as mentioned earlier, or maybe even corporation tax, would be a better idea.

[martin84]

Why is there nothing wrong with protectionism?

Do you also feel companies should be banned from outsourcing work to cheaper labour markets?

[Eric Mc]

clarkey328is said:

Eric Mc said:

Define what you mean by "UK made".

Do you mean what proportion of the product has to be made in the UK, or just assembled here? I would say that some sort of meaningful assembly would have to happen here, not just packaging and that sort of thing. Perhaps there could be a sliding scale to account for the proportion of production that takes place in the UK.

Exactly. It would be impossible to administer such a scheme.

Look at the cars that are built in the UK. How much of them are "British",
Would something assembled partly in Britain and partly outside the UK be eligible?
If based on percentage of teh product being assembled, how would you measure such a percentage? By components? By weight? By volume?

[martin84]

If you need to cut your own VAT rate for your own companies to succeed then its pretty obvious whats going wrong there in the first place....

[GavinPearson]

martin84 said:

Why is there nothing wrong with protectionism?

Do you also feel companies should be banned from outsourcing work to cheaper labour markets?

There is strong economic data to show that it doesn't actually work.

It doesn't improve competitiveness.

Britain needs to fundamentally ask why their business taxes are at the levels they're at. If it were cheaper to do business in the UK, would less work be outsourced? Probably. Would fewer goods be imported? Probably. The answer is to figure out the level the taxes need to be at, then cut expenditure accordingly.