www.vote-jonathan.co.uk

Incredible!  The British government has decided to cut VAT to exactly 15% (the minimum allowed under EU law).  If we wished to cut VAT to 14.9%, we would have to obtain the consent of each of the other 26 countries in the EU. 

The Centre For Economics & Business Research suggested that VAT should be cut from to 12.5% in order to make a substantial difference to the amount of money that people spend.  After all, if you do the Maths, the government's cut in VAT will make prices on average 2.1% cheaper - IF retailers pass on the full cut to customers.

Part of the reason for the Credit Crunch is that people have borrowed too much money for a long period of time.  Ironically, the government's solution is to borrow money now to fund tax cuts - and pay later.  The principle of tax cuts to cope with recession is a correct one - but who's going to pay for it?  At the moment it seems like the taxpayer will be funding it through big tax rises later.  At a time like this, the government should be finding ways to cut non-essential spending.  Quangos, bureaucracy and the EU are obvious targets - leaving the EU would save £915 per year for every man, woman and child in the UK; more than triple the amount required to pay for these tax cuts!

What can we say about the government's decision to cut VAT?

1.  It's a step in the right direction in theory.

2.  A bigger cut in VAT was needed to have enough effect on prices to affect spending, but that would be illegal.

3.  A tax cut now has to be paid for later; the UK Independence Party has clearly set out how it could save more than enough money to finance these emergency measures.