why did the government raise VAT

Johnee

Its accepted by most economists that the UK move was a complete waste of money. The UK governnment has effectively blown a lot of cash (and it doesnt have much to go around) on a badly-directed, scattergun attempt at stimulating their economy. It now doesnt have that cash to undertake more targeted stimulus measures, and its going to have to put the VAT rate back up while people still dont have a lot of cash and (as the economic data out today shows) the UK economy is still in recession and lagging way behind all other major states.

Im not saying the VAT increase here was a good idea but a VAT decrease would not have been a good plan either.

Howjoe1

because there brain dead:mad:

jackthekipper

If it does fall to 15%, then that means when people would have spend 121 in the past they would now save 6.50, is this enough to get people spending?

ninty9er

jackthekipper wrote: »

If it does fall to 15%, then that means when people would have spend 121 in the past they would now save 6.50 will still pay 121, is this enough to get people spending?but retail profits will increase by €6

Fixed that there for you.

jackthekipper

ninty9er wrote: »

Fixed that there for you.

You cynic

thebman

ninty9er wrote: »

Fixed that there for you.

Well then people will still shop up north.

I doubt it TBH, most Irish businesses have made some attempt to decrease prices over the past year but the government is blocking many cost cutting measures that businesses would like to take.

zootroid

thebman wrote: »

Well then people will still shop up north.

I doubt it TBH, most Irish businesses have made some attempt to decrease prices over the past year but the government is blocking many cost cutting measures that businesses would like to take.

Examples?

cson

skearon wrote: »

It was raised by a mere 0.5%, so unless you're buying a €100,000 Range Rover its not noticeable

The UK drop from 17.5% to 15% was a failure, prices didn't decrease and its going back to 17.5% from January 1st

jackthekipper wrote: »

You cynic

He's (Ninty9er) absolutely 100% right. The nature of retail is to pocket the VAT decrease - i.e. keep broadly the same price on the product and then keep the extra revenue for the company. It hasn't worked in the UK by all accounts and knowing the nature of Irish retail, it won't work here. As has been mentioned, the increase was negligible last year. That said, I do think in an attempt to plug the Newry leak, the Government will row back and reduce VAT tomorrow.

thebman

zootroid wrote: »

Examples?

Walk down a street. Shops have been reducing prices all over from what I can see.

I know my shopping bill has come down considerably. I don't really need to give examples, what do you want me to do, go take photos of things in the past and the present?

Tesco had a massive campaign earlier in the year and although they've since increased some prices they still had to do it in response to more people shopping at Lidl/Aldi.

Just look at the price of DVD's/games and many other luxury products too have come down in price massively this year.

nesf

zootroid wrote: »

Examples?

Latest stats from the CSO show an increase in volume in the latest quarter but a decrease in turnover for the retail sector. So shops are selling more stuff cheaper than they did previously. Can't be arsed actually getting finding the stats but was reported in the News etc.

Though honestly, anyone with any cop on has seen the drop in prices that's been happening. Compared to two years ago a Euro goes much farther.

Dannyboy83

Is that an increase in volume of sales?
or stock?

Just wondering if that accounts for theft, I had heard it was up significantly.

I do agree prices are down however. In many products.

cson

nesf wrote: »

Latest stats from the CSO show an increase in volume in the latest quarter but a decrease in turnover for the retail sector. So shops are selling more stuff cheaper than they did previously. Can't be arsed actually getting finding the stats but was reported in the News etc.

Though honestly, anyone with any cop on has seen the drop in prices that's been happening. Compared to two years ago a Euro goes much farther.

Easiest way to judge this; O'Briens Sandwich Bars are gone

cson

Dannyboy83 wrote: »

Is that an increase in volume of sales?
or stock?

Just wondering if that accounts for theft, I had heard it was up significantly.

I'm always interested in what kind of theft provisions and measures to combat it they have in the likes of Penneys especially. We all know the type of crowd they attract (and I mean no offence by that) and I'd imagine the amount of stock they lose through theft would be significant.

nesf

Dannyboy83 wrote: »

Is that an increase in volume of sales?
or stock?

Just wondering if that accounts for theft, I had heard it was up significantly.

I do agree prices are down however. In many products.

It would be volume of actual sales. I'll see if I can dig up the details.

Edit: Here you go: http://www.cso.ie/releasespublications/documents/services/current/rsi.pdf

I was slightly wrong, volume and turnover increased but volume by more in % terms. The details there are interesting.

cson

It could be roughly linked to EMH too - people don't have the same disposable income anymore so we are seeing an adjustment of the market downwards to a level where people will buy again. Deflation for want of a better word.

Dannyboy83

nesf wrote: »

It would be volume of actual sales. I'll see if I can dig up the details.

Edit: Here you go: http://www.cso.ie/releasespublications/documents/services/current/rsi.pdf

I was slightly wrong, volume and turnover increased but volume by more in % terms. The details there are interesting.

In Table 6
=========
The Baltic countries are doing very poorly, I wonder if thats because they are pegged to the Euro or because of the Russian Market & Kaliningrad.
Ireland seems to be doing reasonably well in the league tables there.

Why are some reports confidential?

Dannyboy83

cson wrote: »

It could be roughly linked to EMH too - people don't have the same disposable income anymore so we are seeing an adjustment of the market downwards to a level where people will buy again. Deflation for want of a better word.

Not something I've encountered before; if I understand it correctly, wouldn't an island nation be less efficient, in that respect?
Although I suppose it does limit choices compared to European countries too.

hellboy99

Drawing Dead wrote: »

why did the government raise VAT

Because they're idiots, they even said it was a mistake months later and still didn't bring it down. In my view the only way to get our economy back up and running and out of recession is to stimulate the economy by lowering VAT, rates, and various taxes across the board, not put everything up, cutbacks in pay to low income families and ones on welfare. After todays budget more people are going to go up north :rolleyes: , when will our government realise that taxing your way out of a recession does not work :mad:

Beasty

UK's rate is going back to 17.5% from 1 January. Despite comments from the politicians, I do not think the 15% rate had any material impact on the UK economy, and overall VAT receipts reduced. Many retailers did not reduce their prices and pocketed the difference themselves. I don't think 2.5% on what are largely non-essential items influenced consumer behaviour, except in NI, where the overall differential of 6.5% and weak £ encouraged more Irish shoppers to head north.

OS119

i don't think there was an issue with the 'on paper' VAT rate falling but the price paid at the till staying the same - indeed i know for myself that prices did fall by the 2.5% - it was merely that no one who feared for their livelihood was going to buy a new tv just because it was £195 instead of £200.

quite why the treasury didn't know that is beyond me...

my entire Christmas spend on VAT-able stuff might touch £700, the drop in VAT saved me little more that £17. anyone who thought i'd go out and buy a new car or build an extention to my house because i've got an extra £17 in my pocket must have been on crack!

mickos

jackthekipper wrote: »

If it does fall to 15%, then that means when people would have spend 121 in the past they would now save 6.50, is this enough to get people spending?

I would be amazed if V.A.T. was reduced to 15% that would be a 30% drop in revenue from V.A.T. and increased consumer spending would not make up that deficit.
The .5% increase had little effect on the cost of goods, as did the 2.5% decrease in the north. The devaluation of sterling has been the main factor. I work for a company which supplies goods to the north. The market has more or less dried up for us because we are now uncompetitive and the exchange rate is the only factor causing this.