Darling cuts VAT in pre-Budget

[leah]

They charge way too much for taxes already... if they do rise in the future then people won't be happy... they should have put some of the billions they collected from tax payers aside for something like this, but they didn't. Cutting VAT won't have much of an effect.

[scottish]

They need to charge for taxes, if they didn't get revenue you'd have to pay for public goods such as NHS, street lighting and so on, the government don't even get enough in taxes to afford their expenditure.

[Clowgon]

What exactly does charity have to do with this? No one has to donate to Charity first of all, and there's such a range of Charity's, they're not all out there to help lower earners :S

Lol i got a bit carried away there.

[GommeInc]

Id usually welcome a 2.5% cut on VAT but it really hurts the economy more.....

1) 2.5% is literally nothing.... 22p knocked off a cd worth £9.99, wow its alot of money isnt it?

2) thousands will now have to be spent on advertisements by businesses, such as catalogs, posters and price tags etc to incorporate the new prices...

3) people will be spending LESS, as if i would really go out and buy another CD worth £9.99 to save 22p? ... theres alot of things i could spend that 22p on isnt their?

4) Its only for 1 YEAR! so in otherwords... within 1 year VAT will be back at 17.5%... great thousands completely wasted on advertisements etc... just to be wasted again?

5) the EU.... yes this debate again.. why wasnt the VAT cut any further? because the EU wont permit a VAT rate of less than 15%

so in the end... its an utterly completely waste of time and money......

One more thing... brown could call an election early next year... but he wont... oh great the next one will be in 2010, thats another whole 18months the labour government has to wreck our country... its only the conservatives which will be left with the clean up... as lets face it... who would vote labour again?

It all adds up though. 22p becomes 44p if you buy 2 CDs. Buying loads of DVDs will even add up, but businesses will either keep their prices the same, lower them, or raise them depending on how badly they've taken it

Heck, you notice the differences more if you buy something like a car!

[Clowgon]

It all adds up though. 22p becomes 44p if you buy 2 CDs. Buying loads of DVDs will even add up, but businesses will either keep their prices the same, lower them, or raise them depending on how badly they've taken it

Heck, you notice the differences more if you buy something like a car!

Every little helps!

[scottish]

It all adds up though. 22p becomes 44p if you buy 2 CDs. Buying loads of DVDs will even add up, but businesses will either keep their prices the same, lower them, or raise them depending on how badly they've taken it

Heck, you notice the differences more if you buy something like a car!

Can't really raise them, as if the price is price elastic then a change in price would mean the amount in demand would fall more than they'd gain in cash, so ultimately they'd lose more, as theres plenty alternative for most things out there.

[Ramones]

Can't really raise them, as if the price is price elastic then a change in price would mean the amount in demand would fall more than they'd gain in cash, so ultimately they'd lose more, as theres plenty alternative for most things out there.

You sound like your reading out of a business studies book. Price elasticity has very little to do with tax cuts and the economy.

I think people are looking into abit too much. The way i see it, the increase in income tax isn't going to have that much of an effect on anyone, the rich people aren't suddenly stop buying because they're earning 7k less a year. And a cut in VAT will be good for consumer confidence, i think it's a step towards increasing consumption even if it doesn't have a massive impact, i think it's a good move.

And i don't understand why people are moaning about it POSSIBLY only being for a year?

It's a fact that in most cases you don't see the outcome of economic policies until 2-3 years after they've been made. I highly doubt the conservatives will do any better.

[scottish]

You sound like your reading out of a business studies book. Price elasticity has very little to do with tax cuts and the economy.

I think people are looking into abit too much. The way i see it, the increase in income tax isn't going to have that much of an effect on anyone, the rich people aren't suddenly stop buying because they're earning 7k less a year. And a cut in VAT will be good for consumer confidence, i think it's a step towards increasing consumption even if it doesn't have a massive impact, i think it's a good move.

And i don't understand why people are moaning about it POSSIBLY only being for a year?

It's a fact that in most cases you don't see the outcome of economic policies until 2-3 years after they've been made. I highly doubt the conservatives will do any better.

I'm not talking about tax, as if you read my post i clearly stated raising prices.

The previous poster said firms could raise price to earn more money due to the fact of them losing money from sales and such.

As for income tax it isn't happening to 2011 if i remember correctly.

I don't do business studies

[kk.]

Can't really raise them, as if the price is price elastic then a change in price would mean the amount in demand would fall more than they'd gain in cash, so ultimately they'd lose more, as theres plenty alternative for most things out there.

actually it all depends on how elastic the product is. the more inelastic something is (like bread) then very little change will happen to the demand. and vice versa for being elastic.

EDIT: oh nm thats what i put, i dunno what i was thinking :S

You sound like your reading out of a business studies book. Price elasticity has very little to do with tax cuts and the economy.

I think people are looking into abit too much. The way i see it, the increase in income tax isn't going to have that much of an effect on anyone, the rich people aren't suddenly stop buying because they're earning 7k less a year. And a cut in VAT will be good for consumer confidence, i think it's a step towards increasing consumption even if it doesn't have a massive impact, i think it's a good move.

And i don't understand why people are moaning about it POSSIBLY only being for a year?

It's a fact that in most cases you don't see the outcome of economic policies until 2-3 years after they've been made. I highly doubt the conservatives will do any better.

it does have some degree of a relation to elasticity. If the products elastic then the VAT means more will be demanded. I agree the VAT cut will only boost confidence and should result in a recession which should be mildly better. Taxes arent too high as well? i cant remember who said that. You need the taxes for everything! NHS, education, police, Public goods. Think about it, either you pay for every single merit good or pay 17.5% on everything and income tax which will probably be less than what it would be if you paid for the NHS, education etc privately. trust me, its better this way than what america do.

[Ramones]

I'm not talking about tax, as if you read my post i clearly stated raising prices.

The previous poster said firms could raise price to earn more money due to the fact of them losing money from sales and such.

As for income tax it isn't happening to 2011 if i remember correctly.

I don't do business studies

So basically your post had no relevance to anything? Some firms will be able to raise prices because they're inelastic, and some wont because they're elasitc. Well done on teaching us all about elasticity.