Following my post a couple of weeks ago, it appears as though that the pre-budget report is likely to include a 2.5% reduction in VAT bringing it down from the long standing 17.5% to the lower figure of 15%. This is the maximum reduction under EU law but some say that all this is going to do is cause future problems.
First and foremost, we are talking about £2.50 in every £100 we spend. I don’t think that’s going to make us all go out and have a spending spree personally. On top of this, the government are likely to be announcing debts of over £100bn!!! This is a huge amount to re-cooperate and the only way is to do this is to increase taxes.
What we are talking about is a temporary decrease while waiting for the ultimate and long term increase. High earners are likely to receive a tax increase to assist with this debt recovery but it is all taxpayers who will lose in the long run.
Only a small point but think of all the builders out there who have pre-printed paperwork with “+ 17.5% VAT” on it. Receipts, invoices, etc all have to be re-printed which could cost several hundred pounds. This could be enough to tip some companies over meaning even more businesses disappearing! Or they could just cross it out and write 15% next to it?!