Tax Cuts!

[derekgas]

(quote andrewb) What I want tomorrow is a massive tax cut on energy saving products. Not only is it good for the environment, but buying energy saving products is a fantastic way to reduce fuel bills which can really help people out financially.

We already have reduced vat on energy saving products, energy efficient boilers for example attract 8% vat, the company buying the boiler pay 8%, but it is still 17.5% to the end user, so it does reduce the invoice to the customer, but not as much as it could if the 8% was for the total job, and not just for the purchase of the boiler, if joe public bought a boiler, I am fairly sure it would be at 17.5%, because the distributors know you cant claim the vat back. Fuel duty at 57p per litre would be the wisest place to cut tax at this present time.

[andrewb]

Originally Posted by derekgas

(quote andrewb) What I want tomorrow is a massive tax cut on energy saving products. Not only is it good for the environment, but buying energy saving products is a fantastic way to reduce fuel bills which can really help people out financially.

We already have reduced vat on energy saving products, energy efficient boilers for example attract 8% vat, the company buying the boiler pay 8%, but it is still 17.5% to the end user, so it does reduce the invoice to the customer, but not as much as it could if the 8% was for the total job, and not just for the purchase of the boiler, if joe public bought a boiler, I am fairly sure it would be at 17.5%, because the distributors know you cant claim the vat back. Fuel duty at 57p per litre would be the wisest place to cut tax at this present time.

Thank-you for that, very interesting, I hadn't realised that was the case.

As for the VAT cuts which are going to be announced tomorrow, I do hope they are properly funded tax cuts rather than being backed up by even more borrowing. We're already seeing our pound plummet in value, if it goes too far the rise in prices of imports will out weight the cut in VAT.

We're in this mess because the government allowed the private sector to over borrow, and now it almost seems like we're trying to counter that by over borrowing in the public sector. Time to live within our means.

[jaysay]

The only thing with these tax cuts is the massive borrowing to pay for it, we are already in debt to the tune of around £60 billion (the biggest debt in our history) and we will have to pay it back. Its the idea that by putting more money in the pockets of the the less fortunate, they will spend more, but will they. A lot of the people in this category are pensioners, who are far more thrifty than most and are likely to put the money away in order to pay for things when the inevitable increases appear

[jambutty]

Stop wasting our money Mr Brown then you wouldn’t have to borrow - to pay back later.

We don’t need all the white elephants and we certainly don’t want them.

Push the energy companies to put the prices back to what they were in June.

[derekgas]

I have just seen on the news that vat is to be cut to 15%, that is good for things vat was paid at 17.5% for, but cold food, kids clothes etc are non vat, so this will only benefit business, if they pass it on that is good, but I suspect you may get 2.5% price hikes to cover for the lost revenue.

[Mancie]

Originally Posted by jaysay

The only thing with these tax cuts is the massive borrowing to pay for it, we are already in debt to the tune of around £60 billion (the biggest debt in our history) and we will have to pay it back. Its the idea that by putting more money in the pockets of the the less fortunate, they will spend more, but will they. A lot of the people in this category are pensioners, who are far more thrifty than most and are likely to put the money away in order to pay for things when the inevitable increases appear

Ah now that's more like it...same old view..should we try the old Tory "Trickle Down" policy by giving cuts to businesses hoping the extra money will somehow seep down to the less well off?....if tax cuts are given to the already well off they are likely to spend it on a nice foriegn holiday or private school fees etc...nice!

[churchman phil]

Originally Posted by derekgas

I have just seen on the news that vat is to be cut to 15%, that is good for things vat was paid at 17.5% for, but cold food, kids clothes etc are non vat, so this will only benefit business, if they pass it on that is good, but I suspect you may get 2.5% price hikes to cover for the lost revenue.

So my understanding that vat revenue didn't matter (as vat paid was offset by vat income, with the difference going to mr taxman if there was any left) is totally off the mark?? How can a supplier who charges vat increase prices when what we pay is cost plus vat - whatever amount vat is??
Please excuse me if I am wrong but if there is a cut in vat then what we pay for goods SHOULD drop too. If they don't then surely the shop/company/individual who sells the goods should be held to account for blatantly increasing their prices and therefore their profit??

[jambutty]

My income doesn’t attract Income Tax and my spending rarely includes VAT so Brown and Darling’s generosity is going to have very little affect on me and millions of other pensioners and not forgetting those on benefits.

These measures are only scratching around the real problem and that is the uneven distribution of the country’s wealth that all of us have created.

A minimum wage that is taxed and then given tax credits is plain barmy.

[derekgas]

Originally Posted by churchman phil

So my understanding that vat revenue didn't matter (as vat paid was offset by vat income, with the difference going to mr taxman if there was any left) is totally off the mark?? How can a supplier who charges vat increase prices when what we pay is cost plus vat - whatever amount vat is??
Please excuse me if I am wrong but if there is a cut in vat then what we pay for goods SHOULD drop too. If they don't then surely the shop/company/individual who sells the goods should be held to account for blatantly increasing their prices and therefore their profit??

Spot on Phil, the energy companies for one have been doing it for years, the supply to them drops in price, but you dont see the benefit for months. So it follows that businesses get a drop in vat, if they drop the price at the checkout, you probably wouldnt notice anyway, and they have already suffered losses, so they will make up the losses, plus a bit, before they pass the vat reduction on, they will also sell on old stock at the old vat rate. But, just so you know, here is how vat works.. I buy something for the business at £100, the vat I pay is £17.50, even if I didnt put profit on (which at retail is 35%) then to sell the £117.50 on to you is plus vat, so you pay ££117.50 plus vat, equalling £138.06, the retailer pays £38.06 to the vat man and claims back £17.50, so you paid £38.06 to vat and the business claimed back £17.50, the vat man made £20.56 out of you!

[churchman phil]

Originally Posted by derekgas

But, just so you know, here is how vat works.. I buy something for the business at £100, the vat I pay is £17.50, even if I didnt put profit on (which at retail is 35%) then to sell the £117.50 on to you is plus vat, so you pay ££117.50 plus vat, equalling £138.06, the retailer pays £38.06 to the vat man and claims back £17.50, so you paid £38.06 to vat and the business claimed back £17.50, the vat man made £20.56 out of you!

That doesn't add up to me
Surely, you'll be claiming the vat back as well as the retailer?? Which means vat man made just £3.06 from the end product (ie me) with £17.50 being reclaimed by both Yourself and the Retailer.

Under the new rate your example equates to £100 to £115, then the £115 to £132.25. Which means I, as the end user, have saved £5.19 with the vat cut. As I don't feel like I'm paying the tax anyway, because it is part and parcel of everyday purchasing life, then it is a very REAL reduction in what I pay for goods and services.
Therefore any reduction in vat will be felt by all who buy things governed by that particular tax.
Unless, like I said earlier, suppliers and retailers blatantly increase profits by keeping goods and services at the same end user price.

[derekgas]

I AM a retailer Phil, I have a showroom and an office too, we have to pass on vat to the customer, but we will take the reduction into account (which means re-pricing everything we sell) but I can gaurantee that many will not.

[derekgas]

In a nutshell Phil, this is how it works: manufacturer to distributor + vat, distributor to merchant + even more vat, merchant to retailer + a ridiculous amount of vat, result = end user pays everybodies vat, and everybody else can claim some of it back, hence if you go direct to the merchant or online, you pay an inflated price which is somewhere in between what the retailer would buy for and what the merchant can actually sell for!

[jaysay]

Originally Posted by Mancie

Ah now that's more like it...same old view..should we try the old Tory "Trickle Down" policy by giving cuts to businesses hoping the extra money will somehow seep down to the less well off?....if tax cuts are given to the already well off they are likely to spend it on a nice foriegn holiday or private school fees etc...nice!

Well there has a lot been made of a two and a half percent cut in VAT, but what is it really, some analyst has already said it could be a whole £10 off the Christmas present bill, or 5p of a pint, but would it be passed on, 15p of a £6 bottle of wine, can't really see his encouraging people to go out and do a Viv Nicholson and spend, spend, spend and considering that at the end of it all the country will be in hock to the tune of £120 billion or even more the future is less than bright

[Mancie]

Thank God we have Gordon Brown in control of the economy of the nation and not those fly by night chancers, Eton smackhead,bottom burning, Tories in charge!

[shillelagh]

Just one question .......... Are the pound shops going to be 98p shops now?