Tuesday 25 November 2008

Two and a half percent

So the Chancellor of the Exchequer has decided that the solution to the financial problems is to throw money at it. He seems to be operating a kind of 'buy now - pay later' tax plan.

The headline grabber is obviously the two and a half cut in VAT down to 15%. Excited yet? Probably not - and there really is no cause to be. You'll save a couple of pounds on your weekly shop perhaps... a few pennies on a tank of petrol... or will you?

No such headline grabbing news is that fuel and alcohol duties are to rise... (dip into the 230 page report for details - if you have the strength!).

So unless you are out there making some big purchases (which I guess is what the Government are trying to encourage) you probably aren't going to notice much difference.

And how, you wonder, will the Government pay for all this generosity? They won't, of course - we (the tax payer) will. The rate paid by the higher tax band will increase (after the next election) and employers and employees NI contributions will rise (again in 2011).

So it really is buy now, pay later.