20% VAT is crippling the economy

Simple_as_ABC

Every time I get a quote for something, these days, the price rises at the end by £2 in every £10! On larger home improvement work this becomes a substantial amount, making me think twice, not to do it or put it offin case the VAT rate drops.

Here’s my thought….

Reduce VAT to Zero rated on all building improvement works.
Surely this would stimulate the economy so much that the loss in revenue fromVAT and the loss of Stamp duty would be offset by PAYE employee taxation and reduced benefit spending. This may even have the effect of reducing the spiralling housing cost enabling first time purchasers to get on the ladder.

There are so many builders out there crying out for morework.
This may even get us out of this huge recession, it's going to take something radical to do it!
:eek:

somethingcorporate

The question is whether an increase in consumer spending would indeed be driven by a reduction in VAT.

It's a big leap to suggest that any increased spending as a result would indeed offset to any significant degree by taxation and reduced benefits.

It's a good idea, but whether it would actually be beneficial is another question.

ILW

Most builders are happy to quote a VAT and a cash alternative.

zygurat789

Simple_as_ABC wrote: »

Every time I get a quote for something, these days, the price rises at the end by £2 in every £10! On larger home improvement work this becomes a substantial amount, making me think twice, not to do it or put it offin case the VAT rate drops.

Here’s my thought….

Reduce VAT to Zero rated on all building improvement works.
Surely this would stimulate the economy so much that the loss in revenue fromVAT and the loss of Stamp duty would be offset by PAYE employee taxation and reduced benefit spending. This may even have the effect of reducing the spiralling housing cost enabling first time purchasers to get on the ladder.

There are so many builders out there crying out for morework.
This may even get us out of this huge recession, it's going to take something radical to do it!
:eek:

And you have how many economics degrees and how many years practical experience of managing a large macro-economy?

JasonLVC

Simple_as_ABC wrote: »

Every time I get a quote for something, these days, the price rises at the end by £2 in every £10! On larger home improvement work this becomes a substantial amount, making me think twice, not to do it or put it offin case the VAT rate drops.

Here’s my thought….

Reduce VAT to Zero rated on all building improvement works.
Surely this would stimulate the economy so much that the loss in revenue fromVAT and the loss of Stamp duty would be offset by PAYE employee taxation and reduced benefit spending. This may even have the effect of reducing the spiralling housing cost enabling first time purchasers to get on the ladder.

There are so many builders out there crying out for morework.
This may even get us out of this huge recession, it's going to take something radical to do it!
:eek:

We'd have to leave the EU properly and disengage from EU driven VAT law as we are currently not allowed in law to zero rate anything other than those items we agreed could be zero rated when we first adopted the EU VAT system.

Why would there be a loss in stamp duty? Is the suggestion that if people are renovating their homes then the housing market will stagnate as no-one will buy/sell their homes? I'm not sure a VAT reduction would lead to that scenario as it assumes VAT is what is keeping people trapped in their homes (rather than a lack of liquidity in the lending markets).

New houses are already zero rated so not sure how VAT would affect the new home market - profiteering new home builders and a backed-up second hand market due to bank lending restrictions is the problem there.

We COULD use the reduced rate of VAT on building jobs, that might work but again, 5% VAT is still VAT and I'm not convinced builders aren't getting work becuase there is a VAT charge - they need to be more competitive and customer focused. The good builders are always busy and never worry about VAT.

Besides the difference between 20% and 17.5% on a £1k job is £25. Are you really going to put off that job for £25 in the hope VAT may drop back down to 17.5% again? For VAT, across Europe, the only was is UP!:D

ILW

zygurat789 wrote: »

And you have how many economics degrees and how many years practical experience of managing a large macro-economy?

As opposed to most of our chancellors of the exchequer.