VAT'd Be A Challenge...

Prodicus is speculating that the government is gearing itself for a cross-the-board cut in VAT, which is an interesting prospect.

As tax cuts go, you've got to say it would be a stonker. It's often occurred to me that the government must earn an absolute fortune through VAT, and many's the time I've felt heart-sick sorry fort the small tradesman who gives someone a quote and then has to lump 17.5% on top of it, thereby putting the deal at risk. It probably would be a good way of re-invigorating the economy.

The thing that strikes me, though, is would business actually want it, especially as a short-term measure ? There would be lots of work associated with changing the VAT bandings; significant administrative costs; goods to reprice, computer systems to change, forecasts and budgets to alter - probably not what they need right now. There is a discussion on UK Business Forums here which suggests that the idea wouldn't be universally popular.

Far better, I'd have thought, to cut income tax or National Insurance instead. Oh, and public spending too.