Labours five point plan.

JasonLVC

Back in June 2011 Balls said this :-

"He said cutting VAT from 20 per cent back to 17.5 per cent would put money back in people’s pockets, stimulate consumer confidence, counter inflation and help create jobs"

and this :-

"Mr Balls confessed that would increase the deficit and lead to higher public borrowing."

Source(!) http://www.dailymail.co.uk/news/article-2004126/Ed-Balls-tells-George-Osborne-Slash-VAT-jump-start-economy.html

same news item, BBC reported the following :-

"Mr Balls did not elaborate on how he would pay for the VAT cut, but said that as well as helping individual consumers, it would ultimately contribute to deficit reduction by giving the economy a "jump start". "
Source http://www.bbc.co.uk/news/uk-politics-13787108

RJP33

As Keynes said, the time for austerity is during the boom not the bust. Unfortunately the last governments incompetence in running deficits after 2003 instead of putting away for a rainy dat hasn't given us that option.

Incidentally how on earth would they fund the VAT cut? (I heard roughly £10bn per year).

JasonLVC

Thrugelmir wrote: »

Would this be a stimulus to the economy?

It might be.

A lot of the tax cuts are aimed at big businesses rather than one man bands and smaller traders (ie, NI reductions on new employees are irrelevant to a sole trader or a two man outfit as they don't want grow/take on staff, they just want to survive the recession and earn a few bob).

So a VAT cut for certain trades may be helpful on the bottom side of the economy with small traders benefiting plus a cut in the standard rate would lose more revenue than a cut on specific things.

But the gamble is if it doesn't stimualte the economy, it is another £3b or so wasted we cannot afford, but I do think it is a reasonable gamble and reasonable amount of 'loss' to risk for the benenfit of good publicity and the potential it might have for growth.

RJP33

JasonLVC wrote: »

It might be.

A lot of the tax cuts are aimed at big businesses rather than one man bands and smaller traders (ie, NI reductions on new employees are irrelevant to a sole trader or a two man outfit as they don't want grow/take on staff, they just want to survive the recession and earn a few bob).

So a VAT cut for certain trades may be helpful on the bottom side of the economy with small traders benefiting plus a cut in the standard rate would lose more revenue than a cut on specific things.

But the gamble is if it doesn't stimualte the economy, it is another £3b or so wasted we cannot afford, but I do think it is a reasonable gamble and reasonable amount of 'loss' to risk for the benenfit of good publicity and the potential it might have for growth.

Isn't the problem the evidence from the recent 15% rate, which instead of stimulating activity is estimated to have cost us £14bn?

tuggy12

Graham_Devon wrote: »

What do people think?

I'm saddened by the fact that the Unions didn't vote Balls in as leader of the Labour Party.

If they had, we could have guaranteed a generation of Labour free government.

JasonLVC

RJP33 wrote: »

Isn't the problem the evidence from the recent 15% rate, which instead of stimulating activity is estimated to have cost us £14bn?

Yes. I did say the 5% rate is a big gamble, but, as it only affects a small sector the loss/risk isn't going to be as much as £14b.

If it helps pubs/cafes stay in business or even take on a few more Romanian waitresses;) then its a good start.

leveller2911

Graham_Devon wrote: »

They are asking whether you will do it for cash.

Has always happened.

No they are not asking me if I can do the work for cash , they are genuinely in my opinion worried about paying increased vat of 20% and having run my own business for over 20 years I think I understand my customers.;)

Im rarely asked about doing cash jobs and TBH its not worth the hassle.

I would say with confidence that far more customers would have the work done this/next year if the vat rate was reduced rather than putting the work on the back burner and I speak from the coal face Graham.....

Thrugelmir

leveller2911 wrote: »

No they are not asking me if I can do the work for cash , they are genuinely in my opinion worried about paying increased vat of 20%

Had forecast gas bill for next year yesterday. Makes the 2.5% rise in VAT pale into insignificance.

robmatic

Graham_Devon wrote: »

What do people think?

In a nutshell:

I'm not sure how we guarentee jobs. I know labour did this before, but we never heard much more than they were going to do it. How did it go? What job can you guarantee? Is it more to do with bringing forward spending? Which means more debt?

Personally I don't like the rhetoric about guaranteeing jobs. We should instead be seeking to create job opportunities which motivate people.

If we want to guarantee jobs, we may as well have the state employ a few hundred thousand people to count clouds.

Graham_Devon wrote: »

VAT cut I suppose is plausable. I.e. can be done.

Not sure on the immediate VAT cut on home improvements though. Firstly I'm not sure it can be immediate, legally. Secondly, not sure what that's supposed to achieve really. Any thoughts?

I would like to think that this is intended primarily to benefit tradespeople but I suspect that it's supposed to be a nice little sweetener for the propertied middle classes. It certainly won't benefit the economically disadvantaged, who are likely to be in social housing or rented accommodation and wouldn't be responsible for carrying out home improvements (and in any case won't have the cash).