MSE News: Government defends VAT rise

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Chancellor George Osborne insists today's rise is a "tough but necessary step" towards economic recovery ..."

Read the full story:
Government defends VAT rise

Butterfly_Brain

To some it may seem like only a few pence on some items but if you are on a low income all those pennies add up to pounds.

Some of the affected items are:

Soap-powder, softener, cleaning products,toilet rolls, personal care items including shampoo,toothpaste, sanitary pads, medicines etc

Chocolate, chocolate biscuits, sweets etc

Beer, wine, spirits, petrol, diesel, tobacco products - these are all double wammy because they all have duty payable too.

If you have to use any service such as a plumber, electrician, garage work, double glazing, building work, paints, wallpaper, tools etc

All white goods, , furniture, carpets, knitting wool, material, clothes, shoes, tvs, cameras, phones, light bulbs, dvds, cds, computers etc

Car insurance, house insurance, pensions etc are vatable too

So with wages frozen and more job losses on the horizon this will just make things a lot harder and will drive us into a double dip recession.

CLAPTON

it's a tax rise so of course it makes us poorer
whether it drives us into another recession remains to be seen

Arthurian

According to BBC news this morning, Poundland said it will have to absorb the increase because of its name. So I suppose some of Poundland's goods will become smaller packages, and some will become more of a bargain from today.

magicnumber25

This is quite simply a money raising exercise. It is not a solution to help the population of this country, merely a way of taking more money out of people's pockets to pay for the mistakes of others who remain unaccountable/untouchable.

savemoney

They may reduce the contents of some of its goods they have the clout in retail to do this

Arthurian wrote: »

According to BBC news this morning, Poundland said it will have to absorb the increase because of its name. So I suppose some of Poundland's goods will become smaller packages, and some will become more of a bargain from today.

Degenerate

magicnumber25 wrote: »

This is quite simply a money raising exercise.

Congratulations, you grasped the concept of taxation.

callum9999

magicnumber25 wrote: »

This is quite simply a money raising exercise. It is not a solution to help the population of this country, merely a way of taking more money out of people's pockets to pay for the mistakes of others who remain unaccountable/untouchable.

I think you'll find it's not just the "bankers" (the people who you appear to be moaning about - not that most of them were ever at fault anyway) who caused this, it's the millions of people who took out too much debt and then defaulted on it. Blame evil banks as much as you want, but ultimately people have free will, and they chose to take out more than they could handle. You can't just call them idiots and forgive them while simultaneously launching a hate campaign against banks (not saying you inparticular are doing this - but the average person does).

dori2o

It is the most unfair of all the taxes to raise as it affects the poor harder than the rich.

One other thing to cosider is this.

Food, other than chocolate, dinkks etc is mainly VAT free. However, the increase in VAT will nonetheless lead to an increase in these same items.

Lets not forget that food has to be delivered to shops/supermarkets, and it is the rising costs of transporting the food, due to the increased VAT on petrol, vehicle maintenance etc that will force the shops to increase the price of their non VATable items regardless.

callum9999 wrote: »

I think you'll find it's not just the "bankers" (the people who you appear to be moaning about - not that most of them were ever at fault anyway) who caused this, it's the millions of people who took out too much debt and then defaulted on it. Blame evil banks as much as you want, but ultimately people have free will, and they chose to take out more than they could handle. You can't just call them idiots and forgive them while simultaneously launching a hate campaign against banks (not saying you inparticular are doing this - but the average person does).

By the same token it was the bankers who were using OUR money to fund their risky investments. Also, whilst I agree that people should be paying off what they have borrowed, this probably accounted for less than 1% of the money that was lost by the banks.

One final point to note. Nobody at the banks seemed to worry about first of all lending these people the money, no matter what their financial histories or ability to pay back the money. The banks were happy to lend it despite the risks.

JasonLVC

Arthurian wrote: »

According to BBC news this morning, Poundland said it will have to absorb the increase because of its name. So I suppose some of Poundland's goods will become smaller packages, and some will become more of a bargain from today.

Poundland have previously stated they are working with suppliers to reduce package size to maintain the price point, thus instead of seeing 6 packets of walkers crisps you might be getting 5 instead, etc.

Indeed, Poundland have been doing this for ages already, they sell Wrigley's Gum in 3 packs whereas the supermarkets sell them in 4's only.

JasonLVC

dori2o wrote: »

Lets not forget that food has to be delivered to shops/supermarkets, and it is the rising costs of transporting the food, due to the increased VAT on petrol, vehicle maintenance etc that will force the shops to increase the price of their non VATable items regardless.

VAT on fuel is not a cost to a supplier, manufacturer or distributer becuase these will all be VAT registered businesses and they will reclaim any VAT they are charged.

VAT is a tax on the end consumer (you and I), everyone else in the chain are VAT neutral (unless the business is not VAT registered, whereupon it will be an extra cost).

By the same token it was the bankers who were using OUR money to fund their risky investments. Also, whilst I agree that people should be paying off what they have borrowed, this probably accounted for less than 1% of the money that was lost by the banks.

Those 'risky' investments you refer to were originally mortgages and loans given to people who had no intention or ability to repay them. So whilst the bankers took the risk, the people who took out those loans and mortgages enjoyed fancy housing and holidays. When the banks ran out of cash due to loans not being repaid, governments had to step in to keep them afloat.

One final point to note. Nobody at the banks seemed to worry about first of all lending these people the money, no matter what their financial histories or ability to pay back the money. The banks were happy to lend it despite the risks.

Your last point is indeed valid, but risk is what banks do. If they didn't lend money to anyone, nobody would buy anything. Remember, there were also dodgy loans to companies which went under oweing millions, again, banks not lending to businesses = no businesses. They got the balance wrong for sure, but to blame them 100% is unfair.

Did anyone notice any price drops when VAT was reduced to 15%?

For the first few months yes, thereafter, retail stores quietly pushed their prices back up to maintain ingrained price points, thus a pair of Nike Trainers may have gone down from £39.99 to £37.99 but thereafter they were back at £39.99 with the excuse that inflation was rising and production costs had gone up.

Did Argos/Screwfix reduce the price of the item pritned in their catalogues to reflect the reduction/increase in VAT or did they still charge the book price even though the book was pritned when VAT was 17.5% but covered two seasons where VAt was 15%?

Did we notice NCP/council car parking charges go down during the VAT reduction? Did taxi's charge less for their services, did plumbers stop charging £100 an hour and reduce it to £95 per hour? I do not think so.

Point is there are many factors which can be used to excuse a price rise. Petrol didn't go down during the 15% rate becuase oil was 'at an all time high', during the car scrappage scheme nearly every manufacturer increased their car selling prices and blamed 'raw material cost increases'.