Why cutting VAT is a bad idea (right now)

 Hi All,

According to the news feeds the latest great idea from Thatcher Clone 1 is that VAT should be cut to zero or 5%. This is a bad idea and will only make matters worse. For those who don't know VAT is a sales tax paid by the end consumer of the product i.e. you and me. It is currently 20%, but 5% for domestic utility rates. 

The reason why Truss thinks this is a good idea is that a £100 item could in theory be reduced to £80, thus helping people out in the sense they will go on an spend and lift the economy. 

The problems are : 

1. The current crisis is about food and energy costs .Most basic staples don't get a VAT charge anyway, so there would be little of the relief people are asking for  and domestic utilities only charge 5%, which would mean that the increase is mitigated to only 75% and that is before the even bigger increases expected in January and February. The reduction in VAT for petrol (gasoline as Americans call it) would be welcome, but there is no legal requirement for a company to pass this on, in fact as energy producers  are subject to windfall taxes, they are likely to just keep a £100 bill at £100, if not raise it. 

2. As for the rest of the economy, there is as noted above, no legal compulsion to reduce a product in line with a VAT reduction and companies- struggling themselves or out to increase their margins, take your pick- are highly unlikey to pass on any tax reduction to the consumer. I remember this to be the caese way back in 2008 when Labour Chancellor Darling reduced VAT from 17.5% to 15% for a couple of months, wherein many companies simply took the cut onto their own profit margin, rather than pass the cut onto the consumer. 

3.If most companies do not pass on the VAT cut then when this is reversed by the government it will see prices automatically rise by 20%, thus adding further to inflation. 

4. If we do see companies pass on the VAT cut, then when it is reversed it will raise prices by 20% and thus create inflation.

5. VAT is a consumption tax, thus reducing it is supposed to encourage people to spend when they might not ordinarily do so. Except that because the increase in energy bills is not addressed by this idea, then it is doubtful that most people will have any spare cash to spend, even if there is a 20% price reduction. 

Conservative Party Leadership Contest: Latest News

 Hi All,

Despite Friday's announcement confirming that the asteroid regulator Astreg has lifted the cap of how many asteroids can bombard the UK to a wopping 3,500 bits of flying rock and that  this will be allowed to hit the UK in October, potentially destroying 24 million households, the current government is nowhere to be seen. The PM has just come back from his sixth holiday in six weeks, the Energy Secretary is  apparently in the Bermuda Triangle and the Chancellor is saying the government is already subsidising the cost of bunkers, even as bunker makers make record profits. 

Meanwhile the leadership race in the Conservative Party, between Thatcher clone I and Thatcher clone II is getting exciting. For members. stuck in the 1980s and have no wish to do what conservatives used to do and combine conservation with pragmatic policy.  Rather it is more important for the candidates to be part of the cult of Thatcher, a feitsh party rather than a party for the 21st century. As for saving the UK during a national crisis- Labour have suggested either a full government purchasing of laser beams to destroy all of the asteroids or free bunkers for all or shuttlecraft to act as a 'noah's ark'- both conservative  candidates dismissed such suggestions .

The current favourite Thatcher Clone I has said she doesn't like the idea of 'handouts' and instead insists her tax cutting will enable families to buy their own laser beams or maybe shuttle craft or bunker. Thatcher Clone II, meanwhile says that the government purchase of laser beams is 'fiscally irresponsible' given the current state of the deficit -as are tax cuts - so the 'right thing to do' is an austerity budget which increases taxes and cuts to  the budget, with the exception of, say, subsidides to Tumbridge Wells,  but as for the asteroids everyone, aside from the 1% mega rich who can look after themselves ,  will just have to lump it and suffer the full brunt of whatever destruction these rocks bring, maybe after the deficit is reduced could a responsible government even think about destroying those asteroids.

End. 

Vaccination sing along

 Hi all, 

One for our covid vaccine sceptics and to family doesn't th r French guy look like bro Sam, after he has stopped using just for men lol!

Can we have the finnish Pm , please?

 Hi All, 

I'd bet if the finnish prime minister , (same age as me!) decided to become our PM, she'd get elected . Well cool dance moves and in any case everyone is allowed to let their hair down once in a while  :