Will VAT go up to 20%, 25%, other, or no change?

[montmorencyt2w]

Do we think that VAT will go up to:

1. 20%
2. 25%
3. Something else
4. No change?

Personally I think that a substantial increase will ultimately be self-defeating, not to mention socially unjust, but I have seen commentators saying that it is the only way Osborne will ever plug the gap. I can see that it would be superficially attractive.

My own view is that 20% is highly likely, and 25% by no means out of the question.

 

[Trader333]

20% is highly likely in my view as well and would bring us in line with much of the EU.


Paul

 

[meanreversion]

All taxes should be 100 pct. That is how to put more money into the economy. Reducing taxes is taking money out of the economy.

I reckon 20 pct, anything higher would be daft.

 

[montmorencyt2w]

I should have said, but the question was in the context of Osborne's first budget, or at least, say, in the first year of the coalition administration.

Yes, I think making it in line with the rest of Europe is likely (even if the Cons don't like Europe ... they can always blame Clegg ).

I'm surprised it's not getting more mainstream airing though. Perhaps everybody knows it's coming, so not "news".

Inevitable it may be but I don't think it's going to do the recovery any favours.

 

[montmorencyt2w]

Well, I couldn't get anyone interested in this, but it seems someone thinks it might go straight to 25%:

http://www.telegraph.co.uk/finance/.../7829890/Roger-Bootle-VAT-could-hit-25pc.html

(As cited in Trade2Win's second-favourite comic, the Torygraph)

Of course it could be some deliberate kite-flying so that the actual increase to 20% doesn't sound too bad

 

[barjon]

might extend the range and put it on houses

 

[Trader333]

Well, I couldn't get anyone interested in this, but it seems someone thinks it might go straight to 25%:

This would be a serious error in my view as it would (as you have previously implied) be counter productive for business growth. As we have little in the way of manufacturing and no natural resource industries left, tax revenues are highly dependent on increasing consumerism. An increase in VAT to 25% would have the opposite effect on this in my view.


Paul

 

[montmorencyt2w]

might extend the range and put it on houses

and/or financial services, as I have seen suggested.

 

[scose-no-doubt]

It will whack retail & growth is what it will do. I saw my clients having to swallow the 2.5% because the market really just doesn't allow that kind of price rise overnight -especially with high unemployment. And what when the interest rates start drifting upwards? More buying power taken out of the average mortgage holders pocket. A rise to 25% would translate to a 6% rise on high street prices that can either be passed on to us, absorbed or a it of both. However you look at it it spells disaster for the consumer. I think they just want to kill the little guy to promote corporate growth.

 

[Trader333]

I think they just want to kill the little guy to promote corporate growth

I doubt it as corporate growth is not possible if you hit the end consumer. Also it would be political suicide to do this to the electorate.


Paul

 

[scose-no-doubt]

I didn't mean the consumer I mean small business. They will have to swallow much of the rise and using my clients as a basis a lot of them struggled even with the reversion back to 17.5. I'd say 20 is do-able but 25 is political and economic suicide.

 

[Black Swan]

IMO the major retailers/chains etc.. (which is all successive govts are interested in) will simply absorb the extra vat into their prices in order to remain competitive..has to go up...it'll kill lots of small retail businesses already on respirator...

 

[scose-no-doubt]

It's definately going up. You think they gonna pass up the vat on the booze spends during the world cup. What about 2012? Maybe 21 % by then.

 

[montmorencyt2w]

Well I think the BBC (perhaps being on best behaviour for the moment) is helping to soften us up:

http://news.bbc.co.uk/1/hi/business/10274394.stm

 

[montmorencyt2w]

So 5 of you (us), got it right: 20%