Tuesday, February 10, 2009


VAT cuts and so on.

Many people I speak to mention that the 2.5% cut in the rate of VAT will not matter much; that we won't notice it the scheme of things. I counter that if we spend about £1,000 in a month on "stuff generally", even in the supermarket, getting on for half will carry VAT, so at the end of the month, we will have something like £15 left to spend on more things or, just leave in the bank. In any case, £15 isn't just a little thing, it's significant.
But I guess that depends on whether the retailer passes it on. If the retailer doesn't pass it on, then I suppose the VAT reduction ends up in profits and dividends. So providing the money doesn't disappear out of the country, we still benefit from more people spending more money.
The conundrum that the City Council faced was whether or not to pass on the cut in VAT on car parking charges. It would have cost something to change over (but all other retailers were expected to pass it on). So we've ended up with a projected £88k more in income into the City Council's car parking coffers that was expected.
The good news is that has gone some way to bridging the gap in the budget for this year.
But I still think we should have done what nearly every other VAT charger has done, in passing it on to the consumers.
I hope some of the money at least will be used to fix some of the leaks in Tower Street car park which is flooding again with all this rain.
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