UK 2.5% Vat Cut

[Soot]

I can't see a drop of 2.5 % points in VAT doing what the government hopes; i.e., persuading Joe Public to spend more. It's too little spread too widely. The only certain thing this achieves is a massive increase in government borrowing that'll need repaying. People earning more than 40K, smokers, drinkers and drivers will be hit with higher taxes first.

Had the government announced a 12 month halt on stamp duty it'd have cost less and restarted the housing market - where the problems started.

As for the falling value of the £ - the government's 'initiative' is likely to be a gift from UK tax payers to foreign manufacturers. The lower value of the £ won't help UK manufacturers - we don't have a manufacturing industry anymore. If spending does increase (as the government hopes) it'll be for foreign made goods. But - as Trog points out - these goods will increase in price by around 20-25% to compensate for the devalued £.

For this great initiative the government will increase the national debt and justify higher income tax & national insurance none of which will be invested in the economy - just to repay debt.

I think I'm going to stop reading the newspapers - too depressing .

 

[Keef]

I wish they had just scrapped the Vat on Electricity and Gas .

It should NEVER have been there in the first place.

 

[SANJP]

On the topic off gas and electric

whats some of you guys average bills ?

mines a absolute rip off

3 months gas this time was £514.00 !!

and electric was £457 !!!

I know its got nothing to do with Ecigs but in a way it has

I use mains electric to charge it up and gas to melt the menthol crystals for juice

 

[trog100]

a post i made in my other forum..

#####.

so after a few quiet Mondays we have another manic one..

to quote robert peston..

"So this is the end of Citigroup's cherished commercial freedom, its long swaggering history of bestriding the globe as a banking giant.

This proudest of US banks has been humbled: the rescue is about as close to nationalisation as it's possible to get without the state taking 100% ownership."

"Woolworth has been negotiating with its bank creditors and with a buyout firm, in an attempt to avoid being put into administration under UK bankruptcy procedures.

According to those close to the negotiations, even on a best case outcome up to 20,000 jobs could be lost at the iconic and battered retailer and more than 500 stores could be closed and sold."

and

"Gordon Brown says the UK must borrow billions to stop a deep recession, setting the scene for big pre-Budget report tax cuts."

trog

ps.. it seems we are to borrow our way out of a mess created by borrowing to f-cking much in the first place..

the bottom line being the guys in charge are so sh-t scared that anything they do is better than nothing.. in short whatever wild gambles they take or promises they make they have nothing to lose..

u never know it might work.. he he

#####

that about sums it up...

its long thread and one i started months ago

http://www.cavecom.com/cave/ubb/Forum1/HTML/001180.html

trog

 

[Weegie Burd]

On the topic off gas and electric

whats some of you guys average bills ?

mines a absolute rip off

3 months gas this time was £514.00 !!

and electric was £457 !!!

I know its got nothing to do with Ecigs but in a way it has

I use mains electric to charge it up and gas to melt the menthol crystals for juice

I had the guy from Scottish Gas come around the other day to read my meters, this prompted me to look at my account (it's all done online) and I'm glad I did. They're increasing my gas DD from £24pm to £43pm. I live in a 1 bed flat and [allegedly] have my prices capped until 2010 - it's about 2 years since I capped them. 8-o

Anyway, I logged onto my account again today and noticed I had a credit balance on my electricity (£50) so I phoned them up and they claim the cheque (I don't see why they can't refund direct to the bank account I use each month for DD ) will be with me in the next 10 - 14 working days.

That's the new pink eCig, and some juice, from ecigs-co.uk paid for then...

 

[Natty Bo]

You just watch how the websites and sellers of over the UK do a sneaky one and put all there prices up by 2.5% then take 2.5% off to make it look like you got a discount !

I'm sure some will try it on, but having previously worked in the retail environment there is a trading law that may prevent them from doing this because the new VAT comers into effect next week as opposed to in a months time. This specific law came into effect not too long ago to prevent false pricing in flash sales.

I think a lot of sellers and retailers will keep their prices the same and pocket the difference (they'll need it). Big retailers will pass it on because it will be easier for them to impliment and absorb the cost of the logistics. Plus it gives them a price point edge over any competition that does not drop their prices inline with the new VAT level.

All the VAT drop will do is make Xmas shopping a wee bit cheaper for those still in the black. After that people will see it as a means to save a little bit when they have to be something essential. It will not encourage spending overall. It's just a cheap trick by the government to make it look like its trying to save us money without spending anything from the HM coffers.

...but everything that comes in from china has gone up massively.. what used to cost 300 quid now costs 400 quid.. it hits us as it happens.. stuff that comes in by bulk shipping will take longer to filter thru as higher prices in the shops.. but it will.. and we (the whole economy) do buy tons of stuff from china..

Hopefully they'll artifically devalue the Yuan to maintain their export market. A stronger Yuan is not what China wants nor any of us that import their goods (especially the USA). Not to long ago China resisted strongly in revaluing the Yuan (to a higher level) because of the effect it would have. However it is already artifically too low.

i watch the pound dollar rate every bloody day.. its kinda hovering around 1.5 but bad news could set it off downwards again..

GAH! I certainly hope it doesn't because most of my work is paid for in USD. Over the summer I've seen a massive chunk dissappear from my earnings. Sadly, I believe things can only get worse (much worse). Especially if they cut interest rates again. Rates are too low, government borrowing is rocketing to excessive levels, the economy is shrinking fast and nothing is really traded using Pounds. Suddenly the Pound doesn't look like a good currency to invest in. Makes me wish we had switched to the Euro.

 

[trog100]

its perked up a little to 1.54 natty bo.. he he he.. paypal were hitting us for 1.43 last week..

but as u say ultimately we are f-cked.. governments are just following the "we must do something" principle.. a wee bit like headless chickens do..

trog

 

[tribalmasters]

Money and politics are so complicated AAAAAARGH!!!! Just go with the flow and hope for the best me thinks! Besides, I bet the toilets in the parlament building stink!

 

[TheEmperorOfIceCream]

it ain't the toilets...

 

[Soot]

Many of the points made are entirely valid but I don't agree with the view that the government is up to some kind of trickery. It's worse than that - they've taken an extremely expensive initiative (lowering VAT) that won't do what they say it should do (increase spending) since it's too little, too widely applied and targeted at a public who are already over extended.

I'd love the initiative to work but I can't see how it can. There are only these certainties that will follow this initiative; the balance of payments deficit will increase (IF spending rises), government borrowing will escalate to a worrying level that the smoking, driving, drinking and middle classes (pretty much all of us - but some will be hit more than once) will be required repay. With this squeeze - where's the growth potential?

Sadly, the Tories and Labour have dismantled the UK's manufacturing base. A manufacturing industry could have exploited the devalued £ and had a price advantage on exports. Taking advantage of the opportunity would require investment in manufacturing - but this won't be happening. Instead, the manufacturing industry won't get credit extensions through banks or the stock market. Bankers and stock brokers have f*cked the economy, they've been bailed out but there isn't the slightest sign that this MASSIVE bail out has had achieved anything more than stopping a run on the banks.

While manufacturing was ignored by government we were told how important the UK's financial industry was. The UK is more dependent on this industry than any other EU country. This industry cannot respond to this problem - it is peopled by greedy people who think money is created without work. I don't so much mind the 'greed' - it isn't the only industry that suffers this way (it just has more of them) - it's the lack of intellect and social responsibility added to greed that makes this industry beneath contempt - and far beyond their capacity to reverse the current collapse.

It's not that the government is trying to con us (this time) - it is far worse. The government has chosen a bad policy at great cost and invested its hopes (and our money) in the intellectually and morally moribund.

If the UK can negotiate parity with the Euro it should do so now.

 

[trog100]

germany has a good manufacturing base soot.. but it dont matter what u try and make if people dont have the money to buy it yer buggered..

we dont buy what we need any more thats the real problem.. if money gets tight we end up buying bugger all which is exactly what is going to happen.. who needs a new car when they can make the old one last a few more years..

the bottom line is the situation is out of control.. prayer is as good a solution as any..

tribal has it about right.. "hope for the best "... he he

trog

 

[Soot]

Can't agree with you on this one Trog - apart from "hoping for the best" being the only thing left! ;(

You say "we don't buy what we need" - but we don't earn the money that we then spend on what we don't need. This is facilitated by a financial industry that hands out money for you (anyone / everyone) to buy goods made cheap by people paid badly, working in poor conditions and with little quality control. When it breaks it ain't fixed - you just get another.

Was this ever sustainable? While the UK led the borrowing industry it worked - as long as the borrowers paid back. It was money for nothing - no work, no innovation. But - the finance industry paid massive bonuses to staff who increased "market penetration"; ie, who increased lending on a "money for nothing" basis. It worked for a short while - but it all depended the ability to repay. Banks were stupid enough not to care about this capacity - but their bosses got huge bonuses - so why should they have cared?

Buying bad debt is what the media are focusing on at the moment. Buying bad debt was certainly a serious act of negligence but the source of the problem was more serious still. The money provided (by the finance industry - OUR money) wasn't spent on creating anything - it serviced our and their greed.

Instead of understanding the problem we have a government that will make it worse. - they've invested in the financial industry and rewarded failure.

I don't disagree with Keynesian economics being a legitimate response - the Tory policy of cutting back spending would be disastrous (they only come out with this policy after their banking friends have been saved by our money).

Instead of cutting VAT what could the government have done?

1. Drastically reduced taxation on the manufacturing industry so it could take advantage of the lower £, increase exports and lower the balance of payments defict.
2. Declared a temporary (12 month) halt on stamp duty - thereby reinvigorating the property market and ancillary industries - construction etc.
3. Raised the income tax threshold so that the low paid retained more of the income they earned.
4. Given a £500 gift to all pensioners.

ALL of the above would have been much cheaper.

There's a reason for this - it isn't due to stupidity. Take a good hard look at political finance.

 

[tribalmasters]

To fix the credit crunch requires good weather, people in good moods, people not 'stealing' houses so they can rent them out (poor first time buyer!) and more gold!

It works like this!

1. Wait for sunspots to be in just the right place
2. Make antidepressants and benzodiazepines and illegal drugs available over the counter and ship vast quantities to the government
3. ????
4. PROFIT!!!!!!!!!!!!!

OK now where does that bit about banks and stocks and shares fit in hmmm....

 

[Soot]

I'm with you Tribal - don't know what "benzodiazepines" are - but I think I need some!

 

[Grumpysanta]

I've lost track of time, how long til the next uk general elections ?

 

[trog100]

the capitalist system is in a state of collapse soot on a global scale.. things are bad.. very bad..

it goes way beyond party politics.. nobody knows how it will pan out.. they cant admit to this for obvious reasons.. its beyond control dude..

a system built on a whole bunch of folks selling stuff to another whole bunch of folks who dont really need it.. needs just one thing to bring it down.. no money in peoples pockets and the inability to borrow more... that is now where we are at..

trog

 

[tribalmasters]

We could go back to living in caves I guess, we know how to make fires so could eat stoats and foxes!!