V.A.T to rise 2.5%?

[anotheoldgit]

http://www.timesonlin...cs/article7025833.ece

Both the Labour Party and the Tory Party say they will increase VAT to 20% if they get into power.

/// Doing so would raise an extra £13 billion a year at a time when financial markets are searching for signs that whoever takes power is serious about tackling Britain’s £178 billion deficit.///

Excuse me but didn't Brown reduce VAT to 15%, before it went back up to 17.5% in January?

So in fact by increasing it to 20%, they will just be clawing back the £13 billon, they lost when they reduced it, or am I missing something?

Before increasing taxes etc, to pay off our huge debt, wouldn't it be better to first make cuts in unnecessary expenditure?

[rov1200]

I think we are caught between a rock and a hard place. Putting up the VAT will cut the purchasing power of individuals so the economy suffers and we are back into the double dip recession.

On the other hand reducing taxation may help the economy initially but then the debt owed by the government increases which can lead to a further run on the pound and a downgrading in our 3*** status in the ability to repay our massive debt. The car scrappage scheme has reached its conclusion so we can't rely on this or for any other consumable product. The £ has been so devalued that we have to produce many more goods just to produce the revenue we had before.

Like you say we should concentrate on our massive expenditure but this may mean the further loss of thousands of workers.

In other words we are in a hole,

If only we could produce something in this country that the world wants. Something highly technical. We have the expertise but not the leadership. A Dragons Den type panel to examine ideas and with government support put a plan into action.

[jno]

the cut in VAT was always a short-term measure to kick-start the economy. I expect it had an effect and we'd have been worse off without it; but some much longer-term reorganisation looks necessary.

I don't know why the motor industry was the only one that got a direct boost. It's not all that big, but ministers do love their fast cars. Similar incentive schemes might well have been introduced in other sectors. Apparently scrappage has brought a rise in spending on cars.

[anotheoldgit]

Perhaps with us now being a service industries country instead of a manufacturing one, it will be a very difficult to climb out of the hole we are in.

rov says "If only we could produce something in this country that the world wants. Something highly technical."

Well we do but we hear very little of it, I am referring to Rolls Royce, (no I don't mean Rolls Royce cars, which imminently springs to mind when Rolls Royce is mentioned), I mean Rolls Royce aero engines.

Yes the best aircraft engine in the world, which is purchased by most of the World's airlines.

[rov1200]

Quite agree AOG Rolls Royce are a beacon for this country with their aero engines.
But I have in mind new startups. Just take the USA. In the software field we had Microsoft started by Bill Gates. Then we had Silicon Valley. Following them we have had Google, Intel, Facebook Utube and many others.

Berners-Lee invented the world wide web and he was British although some say it was based on Arpanet. He gave it away for free. Why?

We invented the Harrier vertical take off jump jet and that was virtually given away to the yanks.

We have been overtaken by France and Germany because they plough their wealth back into the country and not in expensive wars.

Our debt will mean our children and grandchildren will be paying for their mistakes.