ARE we really to believe that a minor change to VAT is going to save our domino economy?
Yes, it is true that when you look at the figures this drop from 17.5 per cent to 15 per cent tax will potentially put vast sums of cash into the economy over the medium term, the question is who could genuinely benefit?
You will need to spend £1
,150 on top-rated VAT items next week to save £25. How long will it be for the average household before they can say that the fall in VAT has actually allowed them to buy a new toaster, DVD, or even a TV, that they would not have bought before the change?
One key point that seems to have missed most of the coverage is the additional tax rise that will be added to vehicle fuels, beer, and cigarettes.
The drop in VAT on these will be offset by a tax rise on them, so they will actually cost the same but the revenue will go more to the Government than the EEC, hardly making an instant impact in people's pockets.
Most goods are delivered by road, incurring fuel costs. If the rate of VAT on road fuels falls but the cost stays the same due to other tax adjustments then hauliers will be able to claim less back through VAT refunds, yet they will be paying out the same for each tank of fuel. Another hidden cost to an already struggling area of our economy, and one which may well be passed on to the consumer.
Since household fuels such as gas and electricity have rates of only 5 per cent these are apparently unchanged, no help there then for bill payers at a time of the year when bills are at their highest.
Surely there are better ways to distribute a bit of additional wealth: reduce VAT on power, send every household a cheque for £100, drop stamp duty for first time buyers, reduce income tax, force mortgage lenders to reduce their rates even where a fixed rate applies (which is very common), reduce national insurance, or make all school dinners free.
Highly paid Government officers and economists provided us with a system where bankers line their pockets with massive bonuses based on risky investments, personal debts are totally unsustainable, and record unemployment, repossessions, and personal bankruptcy loom over the not too distant horizon. There are many ways to help people in the short term.
Should we not be looking to make a bigger impact through some fresh thinking, invest in public works in renewable power, provide more teachers and sports facilities, cut fuel duties, and (as a non-smoker I hate to propose this) allow bars, pubs and clubs to have a smoking policy, even if this means the Government assisting with air filtration and ventilation.
The stock market may have liked the changes in VAT but I very much doubt whether the Castle Market will see a massive rise as a result.
David Saynor, Cardwell Avenue, Sheffield 13 The 2.5 per cent VAT reduction is unlikely to be much help to consumers but it could make a big difference if the money was instead given by business to good causes.
We all know that charities will struggle to maintain their fundraising during the recession.
So I urge business to pass on all their VAT savings to a charity for the month of December.
I think most Sheffielders would support local businesses who make this choice.
I have decided to donate all the VAT savings for December to PACT, based at the Sheffield Childrens Hospital, and which supports families whose children have been diagnosed with cancer.
Paul Iseard, The Famous Sheffield Shopn A 2.5 per cent cut in the VAT rate. So, if you spend £50 that means you will save £1.25. Wow! Let's go shopping...
EB Warris, Raeburn Place, Sheffield S14
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