Recession over Soon

IveSeenTheLight

wymondham wrote: »

With the reduction of 2.5% on VAT, albeit temporary rumoured to be announced tomorrow, does anyone think this will really make any difference at all and get us to change our mind, improve our confidence and start spending again??? (personally speaking, no chance!)

http://news.bbc.co.uk/1/hi/uk_politics/7744273.stm

I don't think the 2.5% is for the people, but for businesses.

Unlike America, VAT here is incorporated into the price i.e if something costs £100, you spend £100 pounds and the company pass on £17.50 to the governemtn in the way of VAT.

Now that VAT is dropped, I'm doubting that the price would drop, meaning that you still spend £100, but the businesses only need to pass on £15 to the government.

This way businesses get an almost immediate cash injection without needing to go to the banks or get loans.

I'n effect it roughly means that companies can increase price by the 2.5% without it affecting the people on the high street

neverdespairgirl

IveSeenTheLight wrote: »

Unlike America, VAT here is incorporated into the price i.e if something costs £100, you spend £100 pounds and the company pass on £17.50 to the governemtn in the way of VAT.

That doesn't add up, though, surely?

If you buy something costing £117.50, £17.50 goes to the govt. in VAT.

If you buy something costing £100, the pre-VAT price is £85.10 and the VAT is £14.90.

Or have I got that wrong?

StevieJ

neverdespairgirl wrote: »

That doesn't add up, though, surely?

If you buy something costing £117.50, £17.50 goes to the govt. in VAT.

If you buy something costing £100, the pre-VAT price is £85.10 and the VAT is £14.90.

Or have I got that wrong?

You are right NDG but it doesn't change the principle he is trying to get over.

IveSeenTheLight

neverdespairgirl wrote: »

That doesn't add up, though, surely?

If you buy something costing £117.50, £17.50 goes to the govt. in VAT.

If you buy something costing £100, the pre-VAT price is £85.10 and the VAT is £14.90.

Or have I got that wrong?

You are right in the figures, but my principle and point is still the same

IveSeenTheLight

neverdespairgirl wrote: »

That doesn't add up, though, surely?

If you buy something costing £117.50, £17.50 goes to the govt. in VAT.

If you buy something costing £100, the pre-VAT price is £85.10 and the VAT is £14.90.

Or have I got that wrong?

Ok, using NDG's figures.
buy something at £117.50 before and they pass on £17.50 to the govt.
Now buy something at £117.50 and pass on £15.33 to the govt.
thus instead of selling at £100 pre-vat, you have now sold at £102.17 or an instant 2.17% increase in profit without anything being passed on to the spender

Make it clearer NDG?;)

mistral_2

Well top tips for beating the recession

Cancel christmas for everyone except the kids and agree a limit for presents

Get invited to a relatives for Christmas dinner even if you dont like them .

All that cost is a bottle of wine (free from m@s meal for a tenner) and a bit of boredom.

Let the recession continue people need to learn they cannot live off credit

and I hope the bankers learn a lesson

The frantic offers by shops to bring in your buisness.

Wolworths is on the verge of crashing so watch what you buy online.


MC