Do you think the vat rate decrease was worth it?

[elaine@cheapaccounting]

As the date to increase vat back to 17.5 % approaches (assuming nothing else is announced in the mean time) do you think the rate decrease was worth while?

Has it helped you business?

Has it been an admin nightmare?

 

[Scott-Copywriter]

Has the VAT decrease been a deciding factor in making people spend more and buy more? Probably not, except in rare circumstances.

Has it been worth the decrease in the governments VAT revenue which they will no doubt try to scrape back somehow? Probably not.

The whole thing hasn't really made any sense. In the grand scheme of things it will allow the individual members of the population to save a few pounds, but the combined total is many millions lost in VAT revenue which the Government has printed money to replace.

 

[DavidT]

I wouldn't go as far as a nightmare but I would find it difficult to argue any overall benefit to consumers or the economy.

At best it meant a 2.13% saving to the end VAT-payer and for a period of just over a year. Then this was for those that passed it on, where many retailers working on a set retail price would not do so.

Then for both the change in reducing the rate, and increasing it again there will be costs in administration and accountancy - for which someone will have needed to take this knock... usually the consumer in the end.

Considering that - business and consumers are quite likely to have lost out.

I'd be interested to hear those that honestly feel it has helped, and their reasons for this!

 

[julian_shaw]

Interesting discussion point.

At one stage, I thought it could be a good idea. Here's an article I wrote on the subject, with interesting aspects that I had not realised until I did some reading around it.

http://money.msn.taxbuddies.com/newsb.php?id=71

I don't think we will know until the rate reverts. Then we'll be able to assess the "end-game" aspect, whether demand is stimulated by the need to buy before the 2.5% extra kicks back in.

Julian

 

vat should be back to 12% its a shocking tax that effects all members of society ,the vat cut was a tax cut of sorts and for that we should be happy, i would rather the vat start rate was over £100 grand this would help small businesses,and cut down the bloody paper trail

 

[elaine@cheapaccounting]

Well I did petition for vat to start at £100k:

http://petitions.number10.gov.uk/increasevatreg/

Whilst I do not support this, I think vat will increase far beyond the 17.5% very soon.

 

[Jenni384]

I voted other.
Being pernickety, I didn't answer the question!
What I think is *not* worthwhile is putting it back up again in January!

Whether the decrease helped or not, I can't see that the increase is going to help anybody at all. The economy is still pretty bad and increasing VAT is just going to hurt people (because, lets' face it, while not all folk passed on the VAT cut to the end consumer, you can bet your bottom dollar that more folk will pass the VAT raise on again!)

January sales are going to be interesting - not as many bargains to be had?

I'm not even considering the admin cost to businesses here either.

 

[elaine@cheapaccounting]

Jenni - agree with your thoughts.

But how else is the bail out funding for the banks going to be found?

We have a massive hole in the coffers and that has to be financed from some where.

 

[Dawg]

It had some value in that it confirmed that we are led by idiots who think we are the idiots to be taken in by cosmetic gestures.

Any added buoyancy given to consumer demand will be significantly less than the 2.5% drop, (the opposite of a multiplier), and will probably be less than the administrative costs.

The best that might be said about it is that a Labour Government was lowering the rate of a regressive tax as per their aim of increasing social and economic equality. But they didn't do it for that, did they?

 

[KidsBeeHappy]

I have seen quite a lot of large capital investment type stuff done, particularly at a domestic level. There have been quite a lot of home improvement, double glazing type projects done. At a business level, there seems to have been an outbreak of big green agricultural sheds, and tractors........

 

[An Oasis]

Has not made any difference at all.

VAT is an insidious tax - link (especially for the accountants) Mark talks a lot of sense. http://markwadsworth.blogspot.com/search/label/VAT

http://www.youtube.com/user/ontheterraces#p/a/u/0/WD-2eKtFaIk

 

[movietub]

VAT is generally invisible to most consumers anyway - I would go as far as to say that most don't even understand the principal of charging vat, claiming back etc. In much the same way that most expected bigger reductions when they heard about the rate drop...

And for our business it made no real difference. We were already as cheap as we could be, selling online is often like that. Come the increase us and all our competitors will increase in unison.

If anything I have noticed customers rushing to buy before the rise - but this is of no benefit to me, its just going to casue a subsequent dip afterwards.

All in all this has been just another crappy labour wool over eyes excercise. None of us wanted it but we all paid to make it happen, now we're paying to change it all again!

Great.

 

[movietub]

by the way - whats the latest on the rumor mill that it will be delayed? any substance yet?

 

[elaine@cheapaccounting]

by the way - whats the latest on the rumor mill that it will be delayed? any substance yet?

No substance yet and bets are being had as to when / how much he will increase the rate to

 

The VAT decrease was like trying to stick a plaster on a broken neck.

Earl

 

[movietub]

No substance yet and bets are being had as to when / how much he will increase the rate to

Well I know Darling promised the vat rate would return to 17.5%, but then admitted that labour had already signed off a rise to 18.5% which they subsequently tried to overturn without anyone knowing...

And according to various sources the clever money is actually on an increase to 20%.

And all analysts seem to agree that corp tax will likely rise to 25% very soon, and income tax to 24%.

However the fuel tax hike will be deffered - probably as its the hottest issue so good for voter pleasing.

That may all be wrong of course, but routing around through mostly reputable analysts articles then the above is what seems to be most constant and agreed upon.

So basically no incentive to make money from a business in the near future - guess thats designed to keep money circulating and minimise hoarding. Personally I perfer to hoard

 

[movietub]

MacIntyre Hudson's pre-budget report predictions and betting odds:



(Not below but Hudson also believes lower rate income tax will rise)

 

[ThePublisher]

For me being on the flat rate scheme I've lost out through this past year with the VAT rate being lowered. I've been charging 2.5% less to customers but only handing 1% less over to the taxman, I've lost out on 1.5% of VAT revenue. I don't think there's anyway I've made this back in other ways.

Being in B2B sales, there's been very little upside with the reduced VAT rate making any difference to most of my customers

 

[no118.co.uk]

NO IS THE SIMPLE ANSWER

The cost to businesses for making the changes needed, (change of stationery, updating computer and updating till) was not worth it at all.

Just another government cock-up that did not work

 

[movietub]

0One last link well worth following

http://www.mygame.com/game/gb

good luck shooting :

 

[elaine@cheapaccounting]

well look alike it is a no for so far