Just read that accountants Grant Thorton are predicting " A 1.5 % rise in VAT from 17.5% to 19%" in the coming Budget.
Clever, these folks! A 1.5% rise on 17.5% is actually an increase of 8.5%.
They did the same when raising it from 15% to 17.5%. Trumpeted a mere 2.5% increase when the true % increase was 16.6%
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Probably true - isn't this the rate in France? Or is it 21% in France and 19% in Germany? So much for harmonisation of taxes.
That should send the economy nicely into recession.
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France dropped their rate 2 years ago from 20.6% to 19.6%
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No worries. With the sleaze mounting up (Mandelson, Robinson, Vaz), the incompetence gathering pace (Byers, Straw, Cook and Prescott) and "President Blair" doing everything he can to stay out of the way while it all falls apart, their days are numbered. Here is a thought. Vote Labour and you get Tory (in the guise of Blunkett and his policies), vote Tory and get Liberal (all this gentle social approach) and vote LibDem and get Old Labour tax and spend. No wonder we turn out to vote for Pop Idols in higher numbers.
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The MPC has an inflation target of 2.5% and is consistently undershooting it.
Under normal circumstances that would indicate a reduction in interest rates.
But consumer spending is still high, house prices are still increasing and sterling is falling in value against almost every currency except the euro (which is also falling, but faster than sterling).
Lower interest rates would stoke up consumer spending and house prices still further, reduce investment income and therefore pensions, and would reduce the value of sterling, particularly against the dollar.
An increase in VAT could be a useful ploy as it would increase the RPI but not so much as to exceed the MPC target, would raise tax income virtually instantly without waiting for self-assessment returns, would be difficult to avoid and would fit with the government's aim of taxing spending instead of income.
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And of course VAT affects everybody equally no matter how much money you have so the poor are hit harder. Wonderful social policy that one.
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The theory in the Treasury is that the poor spend a higher proportion of their income on essentials like food (zero rated) and housing (exempt) and less on luxuries like beer and fags.
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Oh, and higher prices do not get directly blamed on the government, they can quotes: not being in the euro; greedy multinational companies; bad weather; international currency speculators; the effects of 11/9/01; 18 years of Tory misrule; etc. etc. in their defence.
And the public are gullible enough to believe them.
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Brian et al.... that's why a single instrument (interest rates) can NEVER succesfully control the economy in anything other than the short term. One of President B-LIAR's smartest moves was to give the BoE te responsibility for the 2.5% inflation target - take the credit in the good times and have a ready-made scape goat in the bad times.
You always know when a Labour politician is lying or hasn't a clue what to say when the begin "unlike the previous administration..." - ye gods they've been screwing things up for five years now.
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Fred - Saw the "President" on Sky News last evening, giving an audience, sorry *interview* to Adam Boulton. In amongst his usual failure to answer the question he was asked, or any question atall for that matter, Mr Blur referred disparagingly to the "previous administration", then quickly changed it to the "previous *Conservative* administration.....
Ronnie
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I like the suggestion of columnist Peter McKay (noting the millions the Treasury will net from speeding fines) in today's Daily Mail - for a real rebellion by motorists against Govt-imposed sky high duties and taxes in UK .. perhaps the protest should it be built up gradually to reach a crescendo towards the next general election date? Why not?
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