Emergency Budget: VAT to rise

JasonLVC

zierisaver wrote: »

As has been posted above, this will NOT AFFECT THE PUBLIC BUT WILL CRIPPLE SMALL BUSINESSES. many of you are posting that you didn't notice the VAT reduction, that's because smaller companies, restaurants, etc, did not change their prices - why would they? They would end up with ridiculously priced items; imagine going to your local restaurant and seeing the price of a pizza dropping from say £12 to £11.70ish? It wouldn't happen, and similarly they won't now put the prices up, as it would look ridiculous.

Agree with the point above. Any company that sells a few items but prices them just below a certain amount, for example £99.99 or £149.99 is going to lose out big time.

I'm not sure I agree. A McDonalds Happy Meal is no longer £1.99 in many parts of the country already. The price of a pint of milk has steadily shot up over the last 18 months, as has petrol and none of these have a psychological price point.

If a retailer chose to not put prices up, then that is down to market forces and competition. The only distortion is the same distortion regardless of the VAT rate, that of competitors who are smaller and not VAT registered who can charge less for their products.

JasonLVC

artha wrote: »

Not quite accurate. It was the US financial institutions that caused the global mess. All our government did was to try and deal with it as best they could. To make a true judgement you have to decide whether the tories would have a made a better fist of it. I would however agree that the extent of the mess in this country has been due to overspending on things that were not necessary to combat the global recession.

I'm not defending the labour goverment but get frustrated when people assume that the Uk is in a mess and it's all the fault of the government and life elsewhere is hunky dory. Just be thankfull we didn't have a greek style goverment or as well as increased taxes many people would be taking a pay cut

The 'mess' is the government debt and spending deficit. The cause may be apportioned at the door of 'bankers' but that bubble was going to burst eventually, it was inevitable.

But the debt and deficit we've clocked up as a country over the 'good' years before the economic collapse is the current problem.

We're so focused on blaming bankers and 'global scapegoating but forget that if the UK had lower debts and spending commitments it could easily cope with reduced tax income during the recession - but the UK had already maxed out on 2 credit cards and there's no money left to pay off the bills. Hence the need for such harsh cuts.

zierisaver

JasonLVC wrote: »

I'm not sure I agree. A McDonalds Happy Meal is no longer £1.99 in many parts of the country already. The price of a pint of milk has steadily shot up over the last 18 months, as has petrol and none of these have a psychological price point.

If a retailer chose to not put prices up, then that is down to market forces and competition. The only distortion is the same distortion regardless of the VAT rate, that of competitors who are smaller and not VAT registered who can charge less for their products.

Since when was McDonald's a small company?
You miss the point I am making. I work for a company that sell one product, which is priced just under £100. They sell probably 1,000 units of their product a month at £99. So they will lose about £30k a year off their profit. If you work for a small company you can see that this will have a huge impact on their business.

JasonLVC

zierisaver wrote: »

Since when was McDonald's a small company?
You miss the point I am making. I work for a company that sell one product, which is priced just under £100. They sell probably 1,000 units of their product a month at £99. So they will lose about £30k a year off their profit. If you work for a small company you can see that this will have a huge impact on their business.

You miss the point I'm making.

If your business choose to reduce its profit margins in order to maintain a mythalogical 'price point', then that is not a VAT issue, but a market/competion matter.

VAT plays not part in a companies profits, it may affect how much of a product is sold but only if the market place is distorted. Are you saying that becuase the price point is no longer £99, that the business will lose £30k of sales as a result?. if so, who is picking up on those lost sales, a competitor or are the sales not made at all anywhere?.

zierisaver

The product would be considered part of the luxury market, therefore it is not that other companies will pick up on the sales, but that a price over £100 will adversely affect sales.

Therefore it is likely that the price will have to remain £99 and a larger proportion of the sale price being handed to the government in VAT. Thus the cost of £30k isn't in lost sales, but in lost profit.

Applover

Let's face it, this country simply doesn't 'make' anything anymore. Once we realised we couldn't go on making money from selling each other more and more expensive houses we were all f***ed!!!

Applover

PS Vince Cable = Legend

North_Star_2

Its UP , Its DOWN , Its Up , Its DOWN............ VAT or one of the many House of Commons pillocks trousers , like one poster originally said this increase to 20% is now compensating for the 15% previously, the industry I deal with has many self employed workers and this increase in VAT may just put a large % of them into the other drain on the UK which is jobseekers and other benefits now.

Mikeyorks

ShaneUK wrote: »

There is a "rumour" going around at work that IPT is also to go up, but I can't find anything concrete on BBC or other "decent" site.

Legislation will be introduced in Finance Bill 2010 to provide for an increase in the standard rate of IPT from 5 per cent to 6 per cent and an increase in the higher rate of IPT from 17.5 per cent to 20 per cent in line with the increase in the standard rate of VAT.

........... direct from Treasury.

vaporate

C.Lightowler wrote: »

Completely agree.

and if you insist on buying non-essentials then surely you should be prepared to pay a little more?

Luxuries are just that, if you can afford them you can treat yourself to them. If something is not a necessity then we shouldn't complain when it costs us a few extra pennies.

Trot.

How about paying for what the item is worth and not getting conned, cough tax.

I have no debt, thus did not contribute to this recession so feel victimised by this VAT rise.